Types of uncertainty and probability: some remarks

Abstract

This article comments on Donald Katzner’s “The Problem with Probability.” Professor Katzner criticizes any approach that uses probability to deal with “Knightian uncertainty.” The present article attempts to promote and improve the dialogue between proponents of different approaches to uncertainty and probability, as well as between different proponents of Post Keynesian economics. In this regard, this article highlights (a) the difference between Knightian risk and Savage’s uncertainty, (b) the acceptance into mainstream economics of approaches that go beyond both, (c) the fact that Keynes’s writings of the mid-1930s combined uncertainty with probability and weight in crucial parts of his theory, and (d) some comments on Shackle by authors in the Keynes literature. This article also intends to provide food for thought, hopefully stimulating Professor Katzner and other sympathizers of Shackle’s conception of uncertainty to reconsider the statement or the implication that uncertainty of the strongest type relevant in economic reality is synonymous with complete ignorance about the future.