Economic Methodologists Research Articles

Models as ‘analytical similes’: on Nicholas Georgescu-Roegen's contribution to economic methodology

ABSTRACT This paper investigates the methodology of Nicholas Georgescu-Roegen and his conception of economic models as analytical similes. His approach has received little attention from mathematical economists and economic methodologists. Thus, the purpose of this paper is to characterize his perspective and situate it in the broader spectrum of economic methodologies. It shows that Georgescu-Roegen criticized the lack of significance of certain economic models and attempted to give philosophical foundations to this criticism. He also provided a set of methodological principles that are illustrated by his practice of economic modeling. This perspective placed Georgescu-Roegen in opposition to the axiomatic approach that dominated postwar economics, and in line with economists such as Marshall, Wicksell, and Keynes, on the limited and subordinate role of mathematics in the discipline. Overall, the paper shows that Georgescu-Roegen's methodological contribution is still relevant to contemporary debates on the status of economic models.

A quantitative turn in the historiography of economics?

ABSTRACTQuantitative approaches are not yet common among historians and methodologists of economics, although they are in the study of science by librarians, information scientists, sociologists, historians, and even economists. The main purpose of this essay is to reflect methodologically on the historiography of economics: is it witnessing a quantitative turn? Is such a turn desirable? We answer the first question by pointing out a ‘methodological moment’, in general, and a noticeable rise of quantitative studies among historians of economics during the past few years. To the second question, all contributors to this special issue bring relatively optimistic answers by highlighting the benefits of using quantitative methodologies as complements to the more traditional meta-analyses of both historians and methodologists of economics.

Karl Popper and the methodologists of economics

This article chronicles the difficulties that methodologists of economics have had in introducing Karl Popper’s philosophy to their fellow economists. It presents some general reasons for the problem before specifically examining the proposition that a sound appreciation of Popper’s doctrines cannot be attained from simply studying the doctrines themselves. What it also requires is an understanding of the problem situation that the doctrines sought to address. This is illustrated through an examination of the way methodologists have grasped, or failed to grasp, the development of Popper’s own thought about the problem of demarcating empirical science from non-science and the related problem of whether the limits of empirical science coincide with the limits of arguability. The article demonstrates that a neglect of these considerations has produced confusion in the literature, both in the way that Popper’s philosophy has been presented and in the way in which its contemporary relevance has been assessed.

Adjusting the model to adjust the world: constructive mechanisms in postwar general equilibrium theory

Economic methodologists most often study the relations between models and reality while focusing on the issues of the model's epistemic relevance in terms of its relation to the ‘real world’ and representing the real world in a model. We complement the discussion by bringing the model's constructive mechanisms or self-implementing technologies in play. By this, we mean the elements of the economic model that are aimed at ‘implementing’ it by envisaging the ways to change the reality in order to bring it more in line with the model. We are thus concerned mainly not with the ways to change the model to ‘fit’ the reality, but rather with the model's own armature that is supposed to transform the world along theoretical lines. The case we study is Arrow–Debreu–McKenzie general equilibrium model. In particular, we show the following: gradient methods and stability could be regarded as constructive mechanisms of general equilibrium modeling in the context of market socialism debates; the obsession of general equilibrium theorists with these concepts can be partly explained by the fact that they hoped not to be faithful to reality, but rather to adjust it to fit the theoretical model; mechanism design theory initiated by the stability theorist Leonid Hurwicz could be seen as a successor of this position. We conclude by showing the relevance of this analysis for epistemic culture of much of contemporary economics and hence, claim that it is an important complement to the traditional philosophy of economic modeling.

The systemic failure of economic methodologists

This paper argues that economic methodologists failed to point out to the profession or to policy makers that the method macroeconomists (and applied economists generally) were using was problematic, and therefore bear a portion of the blame for macroeconomics' failure to prepare for the recent financial crisis. The reason they did not was systemic; they did not see doing so as their job. The paper argues that the systemic failure of the economics profession in the financial crisis and the systemic failure of economic methodologists reflect the same cause. Both groups see their primary role as detached scholars or as scientists providing abstract understanding, not as engineers whose primary role is to provide insight and analysis for individuals attempting to achieve better real-world outcomes. Rather, they see themselves as detached scholars. This paper argues that the roles should be reversed – the economics profession's primary goal should be achieving better real-world outcomes, and its secondary goal should be better understanding of the economy for the sake of understanding.

Identity problems: an interview with John B. Davis

In this interview, Professor Davis discusses the evolution of his career and research interests as a philosopher-economist and gives his perspective on a number of important issues in the field. He argues that historians and methodologists of economics should be engaged in the practice of economics, and that historians should be more open to philosophical analysis of the content of economic ideas. He suggests that the history of recent economics is a particularly fruitful and important area for research exactly because it is an open-ended story that is very relevant to understanding the underlying concerns and concepts of contemporary economics. He discusses his engagement with heterodox economics schools, and their engagement with a rapidly changing mainstream economics. He argues that the theory of the individual is “the central philosophical issue in economics” and discusses his extensive contributions to the issue.

Towards an Acceptable Level of Violence: Institutional Lessons From Northern Ireland

Institutional and economic development has recently returned to the forefront of economic analysis. The use of case studies (both historical and contemporary) has been important in this revival. Likewise, it has been argued recently by economic methodologists that historical context provides a kind of “laboratory” for the researcher interested in real world economic phenomena. Counterterrorism economics, in contrast with much of the rest of the literature on terrorism, has all too rarely drawn upon detailed contextual case studies. This article seeks to help remedy this problem. Archival evidence, including previously unpublished material on the DeLorean case, is an important feature of this article. The article examines how an inter-related strategy, which traded-off economic, security, and political considerations, operated during the Troubles. Economic repercussions of this strategy are discussed. An economic analysis of technical and organizational change within paramilitarism is also presented. A number of institutional lessons are discussed including: the optimal balance between carrot versus stick, centralization relative to decentralization, the economics of intelligence operations, and tit-for-tat violence. While existing economic models are arguably correct in identifying benefits from politico-economic decentralization, they downplay the element highlighted by institutional analysis.

Inland empire: economics imperialism as an imperative of Chicago neoliberalism

Recent work such as Steven Levitt's Freakonomics has prompted economic methodologists to reevaluate the state of relations between economics and its neighboring disciplines. Although this emerging literature on ‘economics imperialism’ has its merits, the positions advanced within it have been remarkably divergent: some have argued that economics imperialism is a fiction; others that it is a fact attributable to the triumph of neoclassical economics; and yet others that the era of economics imperialism is over. We believe the confusion results in part from a lack of historical understanding about the nature and aims of economics imperialists. We seek to improve historical understanding by focusing on the activities of a cadre of economists at the epicenter of economics imperialism, the University of Chicago. These activities – led, in the first instance, by Aaron Director and, in the second, by George Stigler – stemmed from the effort to forge a new liberalism or a ‘neoliberalism.’ We then consider Steven Levitt's Freakonomics in light of the insights gained from our historical study. Our analysis leads us to question each of the three positions on economics imperialism held by economic methodologists.

Suppes' Methodology of Economics

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Economic analysis of nutrition interventions for chronic disease prevention: methods, research, and policy

Increased interest in the potential societal benefit of incorporating health economics as a part of clinical translational science, particularly nutrition interventions, led the Office of Dietary Supplements at the National Institutes of Health to sponsor a conference to address key questions about the economic analysis of nutrition interventions to enhance communication among health economic methodologists, researchers, reimbursement policy makers, and regulators. Issues discussed included the state of the science, such as what health economic methods are currently used to judge the burden of illness, interventions, or healthcare policies, and what new research methodologies are available or needed to address knowledge and methodological gaps or barriers. Research applications included existing evidence-based health economic research activities in nutrition that are ongoing or planned at federal agencies. International and US regulatory, policy, and clinical practice perspectives included a discussion of how research results can help regulators and policy makers within government make nutrition policy decisions, and how economics affects clinical guideline development.

A FILOSOFIA DE KARL POPPER: AS DIFERENTES INTERPRETAÇÕES DOS METODÓLOGOS DA CIENCIA ECONÔMICA

Procura-se fazer uma análise de três leituras da filosofia da ciência de Karl Popper (1902-1994) propostas por diferentes especialistas em metodologia da economia. Cada uma delas destaca diferentes aspectos de sua obra (falsificacionismo, análise situacional e diálogo crítico), como recomendação básica para o adequado desenvolvimento da Ciência Econômica.

Methodology and the practice of economists - a philosophical approach

Practicing academic economists are reported to pay little attention to work being done by economic methodologists. This is an unfortunate situation for the sub-field of economic methodology as well as for the discipline of economics at large. If the sub-field of economic methodology does not succeed in communicating with practitioners of the larger discipline of which it is a part, its rationale is seriously brought into question. And when practitioners of a scientific discipline do not pay heed to methodological questions, the discipline is destined to stagnation and possible degeneration. In order to contribute to an amelioration of the noted unfortunate state of affairs, this paper argues the case for purposeful philosophically informed approaches through which economic methodologists may prove themselves helpful and valuable to the practitioners of the discipline. A scheme of descriptive-critical analyses of economic texts is set forth as a means of enhancing academic economists' awareness of, and interest in, philosophical questions embedded in, and vital to, their practices. Moreover, it is argued, and exemplified, how philosophically minded methodologists may contribute constructively to processes directed towards establishing and developing economic theories and analyses.

A análise situacional de Karl Popper: alguma analogia com a lógica da situação na economia?

A contribuição metodológica de Popper se estende para a aplicação do seu método crítico nas práticas científicas e sociais, ou seja, vai além do falsificacionismo e do diálogo socrático como mostrado nas diferentes interpretações dos metodólogos da economia. Com o objetivo de descrever a prática científica e social de Popper, como resultado de sua ênfase na busca e no crescimento do conhecimento, e investigar se existe alguma analogia entre ela e a lógica da situação na economia, este artigo apresenta: i) a prática científico-social popperiana na forma da análise situacional (seção 1), ii) as discussões de alguns críticos e comentadores que identificam problemas na proposta de Popper (seção 2), iii) argumentos sobre a análise situacional de Popper e a lógica da situação na economia (seção 3) e iv) as considerações finais.

Imprecise precision: Rejoinder to Basbøll

We thank Thomas Basboll for his thoughtful and engaging comment on our ‘Reflexvity: curse or cure’ paper (Davis and Klaes 2003), and hope our rejoinder will give further impetus to economic methodologists’ reflections on reflexivity. However, we do not feel compelled to give ground on any of the three main issues Basboll raises, because we believe they only add further support to our three-part classification of reflexivity as immanent, epistemic and transcendent, while his quest for precision – which Basboll believes would rescue us from a perceived abyss of ambiguity he sees looming at the very heart of our project – only confirms for us the imprecision of precision, and, properly understood, the virtues of such imprecision. Here we re-state Basboll’s points and reply to each of them. First, Basboll rightly identifies our interest in Las Meninas as one prompted by an interest in interpretative ambiguity and its representation, and one stimulated by how reflexivity has been discussed in the methodology of economics literature. We introduced the painting as a means of distinguishing three levels of reflexivity, because we explicitly wished to model reflexivity on a visual metaphor (Klaes 2003: 331). Basboll regards this as the cardinal sin which he alleges fatally undermines our endeavor. By starting with a metaphor which he claims is ‘needlessly vague’, our ‘analysis goes astray the moment’ we present its outlines (p. 114). Analysis of reflexivity should rather draw up a ‘rigorously determined contextual space’ ruled by such stern stuff as strict ‘logical form’ (Ibid.). But Basboll’s own particular approach to ‘logical form’ is metaphorical itself in that the only framework for analysis that he himself offers for a rigorous approach to reflexivity is again a particular interpretation of the painting, in this instance, a geometrical one, and indeed a Euclidian one at that. Certainly geometry can be used to investigate the painting. But this investigation is nonetheless interpretive and metaphorical in that it provides a particular framework in which one can ‘see’ the painting. Moreover, it is

Naturalised epistemology and economics

The relevance to economics of naturalised epistemology (also known as the naturalistic turn) from philosophy of science has recently been argued by economic methodologists, especially by D. Wade Hands (Reflection Without Rules: Economic Methodology and Contemporary Science Theory, Cambridge, Cambridge University Press, 2001). This concept is held by Hands to constitute part of the ‘new economic methodology’ that consists of the ‘interpenetration of economics and science theory’. Contrary to Hands's case, naturalised epistemology is shown here not to represent a qualitatively new concept, to possess little coherent meaning, and to be incapable of charting an innovative way forward for economics. Although there are more issues concerning naturalism bearing on economics than are noted by Hands, three specific limitations of naturalised epistemology are discussed. These and other limitations are related to the economics examples Hands proposes suggesting the usefulness of naturalised epistemology for economics.

Ceteris paribus conditions: materiality and the application of economic theories

The apparent gulf between the pronouncements of the methodology of economics literature and the work of economists in their applied and empirical domains has created a position in which economic methodologists can blithely use the phrase: ‘testing theories by confronting them with data’ and then give little attention to the detailed problems which economists face in making claims about the practical applicability of their theories. In saying this, of course we set up a straw methodologist, for particularly those concerned with econometrics have thought long and deep about this in relation to econometric research. Yet, in our experience, there is still little attention paid to two rapidly growing forms of research, namely laboratory experiments and simulations, and even less literature which analyses the methodological diierences between these newer methods and the older research methods used to apply theories, and compares the potential benefits and pitfalls of one approach versus another. We argue here that one useful direction for methodological work in the next years would be to provide an analytical comparison of the standard research activities of current economics. Comparative analysis has the power to provide insights and prevent oversights, and thus deepen our understanding of how the specific methodological assumptions and preconceptions used in each research activity work out in practise. We choose to argue this point by considering the functioning in this context of a well-known, but perhaps relatively underappreciated, rule: the ceteris paribus clause, in four different current environments: namely in mathematical modelling, econometrics, simulations and experiments.

Why economists disregard economic methodology

paper advances two propositions, one concerning content, the other concerning research strategy.n(1) The advent of wide-spread internet publishing reduces the stifling impact of the refereeing process on the papers accepted and submitted to journals. Economics scholars are less bound to devoting a large part of their time and effort on formalisms. They have more leeway to concentrate on matters of content. This greater freedom also improves the chances of the advice and suggestions proposed by economic methodologists being put into practice.n(2) Economic methodology is only able to influence the practice of economics if it takes into account the incentives to which scholars are subjected when they want to pursue an academic career and become prominent. Incentives are transmitted by institutions; it is therefore necessary for economic methodology to analyse how institutions work and how they may change in the future.

Why Economists Disregard Economic Methodology

This paper advances two propositions, one concerning content, the other concerning research strategy. (1) The advent of widespread internet publishing reduces the stifling impact of the refereeing process on the papers accepted and submitted to journals. Economics scholars are less bound to devoting a large part of their time and effort on formalisms. They have more leeway to concentrate on matters of content. This greater freedom also improves the chances of the advice and suggestions proposed by economic methodologists being put into practice. (2) Economic methodology is only able to influence the practice of economics if it takes into account the incentives to which scholars are subjected when they want to pursue an academic career and become prominent. Incentives are transmitted by institutions; it is therefore necessary for economic methodology to analyse how institutions work and how they may change in the future.

Situational Analysis beyond Neoclassical Economists

Until quite recently, some economic methodologists (particularly, those who began their careers in the late 1970s) were of the opinion that Karl Popper was misguided about economics. Some others claimed that Popper said little about economics. Yet, many economics students who began their appreciation of Popper after reading his Open Society and Its Enemies have quickly realized how easy that book is to understand because it is a generalization of neoclassical economics in terms of both methodological individualism and situational analysis. While today it might be easy to complain that basing one's understanding of Popper on neoclassical economics leads to a narrow and useless appreciation of Popper, this too is misleading. The problem is not neoclassical economics but neoclassical economists. After all, Popper himself thought the best way to teach economists about his views concerning methodology was to emphasize that his views can easily be understood as a generalization of neoclassical economics.

Problems with Realism in Economics

This essay attempts to distinguish the pressing issues for economists and economic methodologists concerning realism in economics from those issues that are of comparatively slight importance. In particular I shall argue that issues concerning the goals of science are of considerable interest in economics, unlike issues concerning the evidence for claims about unobservables, which have comparatively little relevance. In making this argument, this essay raises doubts about the two programs in contemporary economic methodology that raise the banner of realism. In particular I argue that the banner makes it more difficult to relate the concerns of those who wave it (Tony Lawson and Uskali Mäki) to those of other methodologists. Although this essay argues that many of the debates in this century between scientific realists and their opponents are not relevant to economics, it does not attack scientific realism, and it does not urge economists or economic methodologists to reject it.