Methodology Of Positive Economics Research Articles

Revisiting Friedman’s “On the methodology of positive economics” (“F53”)

In this paper, I shall defend two main claims. First, Friedman’s famous paper “On the methodology of positive economics” (“F53”) cannot be properly understood without taking into account the influence of three authors who are neither cited nor mentioned in the paper: Max Weber, Frank Knight, and Karl Popper. I shall trace both their substantive influence on F53 and the historical route by which this influence took place. Once one has understood these ingredients, especially Weber’s ideal types, many of F53’s astonishing sentences like “the more significant the theory, the more unrealistic the assumptions” make good sense. Second, I shall claim that the much-discussed question whether Friedman’s essay espouses an instrumentalist or a realist position, is the wrong question to be asked. I shall illustrate that by a comparison with examples from physics in which also unrealistic assumptions are made. Also there, the question whether these assumptions are indicators of instrumentalism or realism is not appropriate. Cleared from these misunderstandings, F53 presents itself as an interesting and reasonable but much less controversial contribution to the methodology of economics.

Friedman's instrumentalism in F53. A Weberian reading

In this paper, Weber’s methodology of ideal types is applied as a framework to argue for the instrumentalist interpretation of Friedman’s methodology of positive economics. Weber’s ideal-typical methodology is characterized as a mix of descriptive inaccuracy and causal adequacy. Based on some recent structuralist results in the philosophy of science it is highlighted how intimately causal understanding and the properties of entities are related. The main contrast between Weber and Friedman consists in the emphases they placed on the causal properties of agents. It is argued that Friedman’s instrumentalism results from his neglect of entity properties for no causal understanding can be placed upon neglected characteristics. By identifying some channels through which methodological Weberianism could spread, the possibility of a real albeit indirect connection between Weber and Friedman is suggested, with Frank H. Knight as the most probable diffuser.

Das Milton Friedman Problem?: A Reassessment of Friedman's Contributions to Economic Methodology

In terms of economic methodology, Friedman’s most well-known contribution is his 1953 essay, “The Methodology of Positive Economics.” This important contribution has overshadowed his earlier contribution to economic methodology, entitled “Lerner on the Economics of Control” (1947). Whereas Friedman (1953) argued that economic theory can be built upon unrealistic assumptions, ironically, what has been almost forgotten is that Friedman (1947) attacked the theory of market socialism precisely for its unrealistic assumptions. This irony presents an interesting puzzle, which we adjudicate in this essay. We argue that in each case, Friedman was making an immanent critique of his intellectual opponents that was rhetorically consistent, yet methodologically inconsistent. This methodological inconsistency is irreconcilable, since Friedman (1953) contradicts the analysis of Friedman (1947).

Critical reflections on a realist interpretation of Friedman’s ‘Methodology of Positive Economics’

Uskali Mäki has offered an innovative scientific realist account of Milton Friedman’s 1953 essay, ‘The Methodology of Positive Economics’, which directly challenges the dominant instrumentalist interpretation. This paper offers critical reflections on Mäki’s approach and interpretation. It is argued that Mäki’s method of rereading-rewriting the text is problematic; that an unforced instrumentalist account of unrealistic assumptions can be extracted from the text itself; and that seemingly realist passages can be plausibly read as expressing an instrumentalist stance.

A theorem on the methodology of positive economics

AbstractIt has long been recognized that the Milton Friedman’s 1953 essay on economic methodology (or F53, for short) displays open-ended unclarities. For example, the notion of “unrealistic assumption” plays a role of absolutely fundamental importance in his methodological framework, but the term itself was never unambiguously defined in any of the Friedman’s contributions to the economics discipline. As a result, F53 is appealing and liberating because the choice of premises in economic theorizing is not subject to any constraints concerning the degree of realisticness (or unrealisticness) of the assumptions. The question: “Does the methodology of positive economics prevent the overlapping between economics and science fiction?” comes very naturally, indeed. In this paper, we show the following theorem: the Friedman’s methodology of positive economics does not exclude science fiction. This theorem is a positive statement, and consequently, it does not involve value judgements. However, it throws a wrenc...

Educational Policymaking and the Methodology of Positive Economics: A Theoretical Critique

AbstractBy critically interrogating the methodological foundations of orthodox economic theory, Tal Gilead challenges the growing conviction in educational policymaking quarters that, being more scientific than other forms of educational investigation, inquiries grounded in orthodox economics should provide the basis for educational policymaking. He argues that the main methodological problem with accepting orthodox economic theory as a guide to educational policymaking is not, as commonly claimed, its alleged reliance on a materialistic and egoistic conception of human nature, but rather its embracement of a value‐free conception of science and the hypothetico‐deductive model of prediction. These, Gilead maintains, prevent economics‐based investigations from adequately dealing with questions of human agency and ethics, which are central to education. Orthodox economic thinking, he concludes, should not be accorded a dominant role in educational policymaking, but rather should only be viewed as providing one additional source of insight that has limited applicability.

Introduction to Symposium on Behavioral Law and Economics

We are pleased to present in this volume of Supreme Court Economic Review a symposium on behavioral law and economics. Most of the papers presented herein were originally written and presented at a conference co-sponsored by the George Mason Law and Economics Center and the Liberty Fund and held in Captiva Island February 2012.1 In addition, the papers have been supplemented by additional papers related to the topic. Taken together, the papers included here present one of the most comprehensive and far-reaching analyses of the current state of behavioral law and economics. In particular, unlike many prior collections of papers on behavioral law and economics, the papers collected here include a wide variety of perspectives, from both enthusiasts for the behavioral law and economics research paradigm, as well as others who draw more skeptical conclusions. In addition, the papers presented here rely heavily on empirical analysis, as opposed to the anecdotal and non-empirical nature of much behavioral law and economics research. The variety of perspectives represented here appraise the current state of knowledge of behavioral law and economics and identify some of the challenges for the research paradigm going forward. The volume starts off with an overview essay by Thomas S. Ulen, one of the founding fathers of behavioral law and economics, Behav-

Beyond the positive–normative dichotomy: some remarks on Colander's Lost Art of Economics

In a series of articles later collected in his book The Lost Art of Economics, David Colander argues that the dichotomous distinction of positive and normative economics has misled economists into treating applied policy economics as part of positive economics and hence adopting the methodology of positive economics for applied policy analysis. Colander therefore urges a reintroduction of the art of economics and calls for a serious discussion on the appropriate methodology for applied policy work. This paper first explores some points not thoroughly examined by Colander in his arguments regarding the art of economics, in particular on its scope and the nature of judgements in the art of economics. It then examines the potential challenges to the tripartite division of economics, the presupposition of Colander's arguments for the art of economics, by examining, respectively, Tony Lawson's and Daniel Hausman's discussion on positive economics as a separate body of knowledge.

Milton Friedman: More than a monetarist!

Milton Friedman war einer der grosten Okonomen des letzten Jahrhunderts. Seine intensive Auseinandersetzung mit dem Keynesianismus und seine Gegenthesen haben die okonomische Wissenschaft gespalten, aber auch vielfaltige Diskussionen befordert. Als streitbarer Verfechter der Marktwirtschaft hat er die Wirtschaftswissenschaft nachhaltig beeinfl usst. Martin Leschke wurdigt das Lebenswerk Milton Friedmans, der Ende Juli 100 Jahre alt geworden ware.

Keynes and Coase

Ronald Coase has written provocatively on the methodology of positive economics, but this aspect of his work is not well known or much attended to, and to the extent it is noticed, it is regarded by most modern economists as eccentric, as it involves a rejection of rational choice theory. The effort in this paper is to rescue his methodological writings from obscurity and note the hitherto unremarked, and paradoxical, methodological affinity between him and John Maynard Keynes, whose unmodern approach to economics is enjoying renewed respect in the wake of the global economic crisis that began in 2008.

The Case for Values in Economics Education

Milton Friedman, in his essay ‘The Methodology of Positive Economics’, states that positive economics is in principle independent of any particular ethical or normative judgements, and he further argues that economics is an objective science in the same way as the natural sciences. School economics has been taught in this way for a number of decades. This article argues for values in economics education and explains how school economics has been based on the discredited philosophy of positivism which is in contrast to social-constructivist understandings of knowledge. After two decades of falling numbers of students taking up economics at Advanced level in England, 2010 saw a rise of students sitting examinations in the subject. A possible explanation is students' desire to understand a fast-changing economic landscape. Teachers have the opportunity to challenge previously held assumptions and to critically explore explanations in a way that is of relevance to students' lives.

The Surprising Weberian Roots to Milton Friedman’s Methodology

The main point of this paper is to contribute to understanding Milton Friedman’s (1953) “The Methodology of Positive Economics” (hereafter F1953), one of the most influential statements of economic methodology of the twentieth century, and, in doing so, help discern the non trivial but complex role of philosophic ideas in the shaping of economic theorizing and economists’ self-conception. It also aims to contribute to a better understanding of the theoretical origins of the so-called ‘Chicago’ school of economics. In this paper, I first present detailed textual evidence of the familiarity of George Stigler with the early work of Talcott Parsons, the most important American translator and disseminator of Max Weber’s ideas, who also helped create sociology as a distinct discipline in the United States. The Chicago-Parsons link is no surprise because historians have known that Frank Knight and Parsons corresponded, first about translating Weber and then about matters of mutual interest. Knight, who was a doctoral advisor to Stigler and teacher of Milton Friedman, was not merely the first American translator of Weber, but remained keenly and, perhaps, increasingly interested in Weber throughout his life. I am unfamiliar with any investigation of the Weberian influence on Knight’s students. I show that Stigler praises Parsons’ treatment of Alfred Marshall, who plays an outsized role in Friedman’s self-conception of economics and economic theory. I also show that Stigler calls attention to the methodological similarity between Friedman and Parsons. Finally, I turn to F1953, and I show, first, that some of its most distinctive and philosophically interesting claims echo Parsons’ treatment of methodological matters; second that once alerted one can note Weberian terminology in F1953.

ON THE ROLE OF VALUES IN ECONOMIC SCIENCE: ROBBINS AND HIS CRITICS

Lionel Robbins’s (1932) An Essay on the Nature and Significance of Economic Science (henceforth, Essay) is one of the two most important works on economic methodology of the twentieth century, together with Milton Friedman’s classic ‘‘The Methodology of Positive Economics’’ (1953). The fundamental legacy of the Essay is having forcefully championed a conception of economic science as axiomatic, value-free, and primarily concerned with scarcity—a conception that is today widely, even though not universally, accepted. Robbins (1932) presented his position as if it captured what was at the time a broadly shared understanding of economic science. As it turns out, Robbins’s Essay was met by largely negative reactions in academic journals. The main purpose of this paper is to describe and assess the nature of the negative reactions to Robbins’s work in the 1930s, primarily with respect to the value-freeness of economics. Some interpreters have argued that the hostility to Robbins’s work was mostly based on a misunderstanding of his position (e.g. Peston and Corry 1972; Masini Forthcoming). Robbins himself supported this interpretation, arguing that, with respect to his work on methodology, ‘‘I have never succeeded in making my views immune from misunderstanding’’ (Robbins 1963, Preface to his Politics and Economics, p. vii). Even though some reactions to the Essay did originate from failure to appreciate the subtleties of Robbins’s views, I want to argue that a great many were based on a substantive disagreement over the very possibility and desirability of keeping values outside of economic science. Recent developments in the debate on the role of values in science show that Robbins’s critics, although clumsily, pointed to genuine weaknesses of the thesis that economic science should be value-free. I will reconstruct and evaluate what I take to be the most insightful lines of criticisms leveled against Robbins from 1932, when the Essay was published, to

The Methodology of positive economics: reflections on the Milton Friedman legacy

List of figures List of tables List of contributors Preface Part I. The Classical Essay in 20th Century Economic Methodology: The methodology of positive economics (1953) Milton Friedman Part II. Reading and Writing a Classic: 1. Reading the methodological essay in twentieth century economics: map of multiple perspectives Uskali Maki 2. Early drafts of Friedman's methodology essay J. Daniel Hammond 3. Unrealistic assumptions and unnecessary confusions: rereading and rewriting F53 as a realist statement Uskali Maki Part III. Models, Assumptions, Predictions, Evidence: 4. The influence of Friedman's methodological essay on economics Tom Mayer 5. Did Milton Friedman's methodology license the formalist revolution? D. Wade Hands 6. Appraisal of evidence in economic methodology Melvin Reder 7. The politics of positivism: disinterested predictions from interested agents David Teira Serrano and Jesus Zamora Bonilla Part IV. Theoretical Context: Firm, Money, Expected Utility, Walras and Marshall: 8. Friedman's 1953 essay and the marginalist controversy Roger Backhouse 9. Friedman (1953) in relation to theories of the firm Oliver Williamson 10. Friedman's selection argument revisited Jack Vromen 11. Expected utility and Friedman's risky methodology Chris Starmer 12. Friedman's methodological stance: causal realism Kevin D. Hoover 13. On the right side for the wrong reason: Friedman on the Marshall-Walras divide Michel De Vroey Part V. Concluding Perspectives: 14. The debate over F53 after 50 years Mark Blaug 15. Final word Milton Friedman References Index.

Milton Friedman: a biography

Childhood and Youth Rutgers University of Chicago Columbia Rose Washington New York World War II National Bureau and Controversy Department of Economics 'The Methodology of Positive Economics' Essays in Positive Economics Family Teacher Keynes A Theory of the Consumption Function A Monetary History of the United States Chicago School of Economics From Economics to Advocacy Capitalism and Freedom Goldwater and Travel AEA President Colleagues Newsweek Columnist Policy Proposals Nixon and Chile Nobel Prize Hoover Institution Free to Choose Reagan Influence Hayek and Ideas School Vouchers and Drugs Recent Work Friedman Prize

Galilean Reflections on Milton Friedman’s "Methodology of Positive Economics", with Thoughts on Vernon Smith’s "Economics in the Laboratory"

The article examines in detail the argument of M. Friedman as expressed in his famous article "Methodology of Positive Economics". In considering the problem of interconnection of theoretical hypotheses with experimental evidence the author illustrates his thesis using the history of the Galilean law of free fall and its role in the development of theoretical physics. He also draws upon methodological ideas of the founder of experimental economics and Nobel prize winner V. Smith.

Friedman's Methodology Essay in Context

This essay uses evidence of the context from which Friedman wrote The Methodology of Positive Economics to call into question the standard interpretation of the essay's central message. The standard interpretation gives excessive weight to the choice between testing via assumptions and testing by implications. Interpreters have missed what for Friedman was the more important methodological choice, testing theory empirically versus not doing so, i.e., whether to test empirically. Both testing by the realisticness of assumptions and testing by success of predictions are means of testing empirically. The alternative that Friedman most opposed was foregoing empirical testing altogether.

Galilean Reflections on Milton Friedman’s “Methodology of Positive Economics,” with Thoughts on Vernon Smith’s “Economics in the Laboratory”

In this article, the author offers a discussion of the evidential role of the Galilean constant in the history of physics. The author argues that measurable constants help theories constrain data. Theories are engines for research, and this helps explain why the Duhem-Quine thesis does not undermine scientific practice. The author connects his argument to discussion of two famous papers in the history of economic methodology, Milton Friedman’s “Methodology of Positive Economics,” which appealed to example of Galilean Law of Fall in its argument; and Vernon Smith’s “Economics in the Laboratory.” While the author offers some criticism of Friedman and Smith, most of the article is a friendly reinterpretation of their insights.

‘The methodology of positive economics’ (1953) does not give us the methodology of positive economics

It is argued that rather than a well defined F‐Twist, Milton Friedman's ‘Methodology of positive economics’ offers an F‐Mix: a pool of ambiguous and inconsistent ingredients that can be used for putting together a number of different methodological positions. This concerns issues such as the very concept of being unrealistic, the goal of predictive tests, the as‐if formulation of theories, explanatory unification, social construction, and more. Both friends and foes of Friedman's essay have ignored its open‐ended unclarities. Their removal may help create common ground for more focused debate in economics.

Remarks on ‘The methodology of positive economics’

Friedman's essay argued that the primary criterion of validity for economic models was not descriptive fidelity, but the accuracy and importance of the predictions generated by its implications. His argument was directed against a major current of mid‐twentieth‐century economics that sought to alter neoclassical theory by displacing the competitive firm as a centerpiece of price theory. The success of Friedman's counter argument was due not only to its cogency but also to major improvements in econometric techniques, data sources and computational capabilities during the last fifty years. As a result contemporary challenges to neoclassical facilities can proceed without resort to the methodological gambits against which Friedman inveighed fifty years ago. A striking example of such a contemporary challenge is the attack on the ‘Law of One Price’ in the field of Finance.