Methodology Of Positive Economics Research Articles

Fifty years of Milton Friedman's ‘The methodology of positive economics’: Introduction

Fifty years of Milton Friedman's ‘The methodology of positive economics’: Introduction

Just So Stories: Posnerian Economic Methodology

Professor Schroeder examines the methodology that Judge Richard Posner claims to follow in his economic analysis and the methodology which he actually follows in developing his account of economic rationality. Posner presents his methodology as being economic in nature. He states that, in science and economics (and, presumably, in law) theories must be instrumental in nature. The only appropriate purpose of an economic theory is prediction. In contrast, Schroeder shows that not all scientists, let alone economists, agree with this assessment. Although theory can have useful applications, science should not be reduced to engineering. Consequently, many scientists and economists seek such alternate goals as description, explanation, and understanding. Posner concentrates on the goal of prediction because he sees law and economics as a form of policy science. He wishes to use the law to manipulate behavior in order to further a societal goal such as wealth maximization. According to Posner, not only do legal subjects act as rational utility or wealth maximizers, the law should incentivize subjects to so act. In contrast, speculative theory and critical legal theory seek not so much to predict but to understand the law. Whereas Judge Posner identifies with the legislator or judge subjecting the law onto individuals, the critical theorist identifies with the attorney who advises and represents the individuals who are subjected to the law. Posner seeks to make individuals fit the objective criteria of the law. The critical theorist seeks to understand how she and others fit in within the legal system in order to free herself from its manipulation and, if possible, manipulate the law for her own subjective purposes. Posner identifies his methodology with the widely adopted scientific methodology of falsification. Once again, not all philosophers, scientists or economists (let alone legal theorists) agree that falsification is the only appropriate methodology or even that it is appropriate at all. Nevertheless, it is certainly a widely accepted one. Posner does not, however, draw directly from the extensive literature of scientific methodology but bases his brief methodological discussions on Milton Friedman's notorious essay, The Methodology of Positive Economics. Prof. Schroeder briefly describes Friedman's thesis and discusses the avalanche of justifiable criticism it has received. She shows that Posner concentrates precisely on the most idiosyncratic and least accepted portions of Friedman's work - what his opponents call the F-twist or the unreality principle. Indeed, Posner gives the F-twist an additional turn of the screw, taking it to a logical extreme that perhaps should be christened the P-twist. Because Posner claims to follow the methodology known as falsification, Prof. Schroeder gives a brief discussion of standard account of falsification developed by Karl Popper and shows how Posner confuses falsification with the disreputable methodology of verification. Consequently, although Posner accuses his critics of proposing ad hoc non-falsifiable hypotheses, Posner can be just accused of precisely the same sin.

The genesis of 'positive economics' and the rejection of monopolistic competition theory: a methodological debate

In 'The Methodology of Positive Economics' (1953), Milton Friedman linked the adoption of a falsificationist methodology to the rejection of monopolistic competition as a valid assumption, thus elaborating a point made earlier by George Stigler in 'Monopolistic Competition in Retrospect' (1949). Both failed to demonstrate that the alternative assumption of perfect competition would perform better under falsificationist rules. These rules themselves are an expression of the ambition to establish an economic science rather than a convincing framework for research. Monopolistic competition theory became the main target of attack, as it highlighted the problematic nature of empirical research interested in perfectly generalizable results.

De Finetti, Friedman, and the methodology of positive economics

Friedman's philosophical view has been the object of several, sometimes contradictory, interpretations. Whatever the interpretation, a specific aspect of Friedman's methodological and epistemological framework has been overlooked: Friedman's adherence to the neo-Bayesian interpretation of probability and induction. This paper, by rectifying this oversight, claims that Friedman's instrumentalism was a pioneering attempt to introduce a blend of positivism, pragmatism, and ‘radical probabilism’ into economic analysis. From this angle Friedman's philosophical work emerges as a contribution to the debate over the ontological status of scientific entities and theories as well as to the methodology of economics.

FRIEDMAN'S METHODOLOGY OF POSITIVE ECONOMICS: A SOFT READING

In his “Methodology of Positive Economics” Friedman aimed to provide a useful heuristic for working economists and not a sophisticated philosophical analysis. Hence, one should be cautious about reading specific philosophical positions, such as instrumentalism, into it. In the context of its time, it was a plea for a positivistic interplay of theory and observation. On such a reading Friedman's plea for unrealistic assumptions becomes much more defensible, and Friedman's essay is broadly consistent with the methodology that most economists now affirm, at least in principle.

Le réalisme cognitif et l’avenir du “Modèle économique”

RésuméVan Parijs démontre que certains schémas d’explication fonctionnalistes ou évolutionnistes (par renforcement/accommodement) sont compatibles avec le schéma d’explication économique (fondements microéconomiques de la macroéconomie), à condition d’affaiblir la rationalité individuelle. Curieusement, Van Parijs refuse ce pas en avant vers le « Réalisme Cognitif » dans le cas du modèle économique, pour lequel il continue de recommander la conception optimisatrice de la rationalité individuelle. Cette contradiction a deux effets: elle coupe Van Parijs des interrogations actuelles sur les institutions, et elle enferme son travail dans la perspective ancienne de Friedman (1953).

Let's get serious about Caprice

It is often asserted that economic science is predictive. Our textbooks are full of such claims. Predictive success, in fact, is given the central role in what serves as the conventional methodology of orthodox economics-Friedman’s “methodology of positive economics.” According to this popular view, theories rise or fall based on their records of predictive success (Boland, 1979; Friedman, 1953; dz Stanley, 1985). Wouldn’t the majority of economists agree with the view expressed by Christ (1951) that “the ultimate test of an econometric model . . . comes with checking its predictions” (Armstrong, 1984, p. 19)? With such importance placed on prediction, why do economic models predict so poorly? Specifically, why do naive time series methods typically outperform theoretically well-supported, macroeconomic forecasting models? After decades of distinguished development, what explains the meager record of successful econometric accomoplishments? In spite of the folklore that dismisses this

A Note on Milton Friedman’s Application of His “Methodology of Positive Economics”

A Note on Milton Friedman’s Application of His “Methodology of Positive Economics”

An Assessment of the Scientific Standing of Economics

In his paper on the “Methodology of Positive Economics”, Milton Friedman warned his readers that, “more than other scientists, social scientists need to be self-conscious about their methodology.” (1953, p. 34). But until quite recently, he seems either to have spoken to deaf ears or, more plausibly, to have been so successful in promoting his own views on methodology as to lead economists to be complacent about the many problems which plague their discipline. Many current textbooks, for example the one by Eugene Silberberg, present economics as a science attaining the falsificationist standards once set down by Karl Popper, despite much evidence to the contrary. Indeed, as Douglas W. Hands (1985) has recently shown, even Sir Karl did not intend economics to be subjected to such severe standards.

Friedman's Positive Economics and Philosophy of Science

Periodically, Milton Friedman's well-known piece on methodology, The Methodology of Positive Economics, is interpreted and criticized. The most recent exchange was initiated by Lawrence Boland [9] with comments by Rotwein [30] and Caldwell [13], and with a reply by Boland [10] to Rotwein. Boland maintains that a coherent philosophy of science instrumentalism underpins Friedman's essay. In reply, Rotwein and Caldwell argue that an instrumental view of science trivializes science in general and economic science in particular. However, Rotwein criticizes Boland for not retaining enough of traditional empiricism, while Caldwell essentially argues that Boland retains too much of traditional empiricism.' While this debate might be a bit exasperating to the non-specialist in methodology, interpretation and counter-interpretation of positive economics is a reflection of continuing developments in philosophy of science and implicit attempts to update positive economics. What is happening is that issues of extreme philosophical importance are being brought into economics in the debate over the nature of positive economics. In philosophy of science, the major issue is whether both skepticism and fideism can be avoided. Skepticism is the view that knowledge as proven assertion from intuition or sense experience is unattainable; while fideism is the view that some unprovable assumption must be accepted as a fundamental belief. Similarly, in economics, it appears that skepticism and fideism are the major issues in the pieces by Boland and Rotwein. Rotwein, believing he is following in Hume's footsteps, adopts a strong form of fideism; while Boland, making a distinction between the intellectual long run and the intellectual short

A Critique of Friedman's Methodological Instrumentalism

Milton Friedman's 1953 classic, Methodology of Positive Economics, is probably the best-known piece of methodological writing in the discipline [9]. It is also a marketing masterpiece. Never before has one short article on methodology been able to generate so much controversy. It was reviewed often, usually negatively. Yet ironically, the methodological prescriptions advanced in his essay have been accepted by many working economists. And this has happened without Friedman ever having directly responded to his critics! The most recent contribution to the secondary literature is Lawrence Boland's piece, Critique of Friedman's Critics [4, 503-22]. Boland argues that Friedman's methodology is best understood as a variant of the philosophical position known as instrumentalism, and that if Friedman is so interpreted, many critiques of his position existent in the economic literature miss their mark. While these points are well-taken, Boland states in his conclusion that no one has been able to criticize or refute instrumentalism [4, 521]. Such a statement leaves the reader with the impression that Friedman's position is not only untouched, but perhaps even vindicated. It is the purpose of this paper to challenge such a conclusion by critiquing Friedman's methodological instrumentalism. In the next section, some brief comments on definitional and interpretive issues are followed by a restatement of Friedman's position. Sections III, IV, and V contain the core of the criticisms against Friedman's methodological instrumentalism, from both philosophical and methodological perspectives. A conclusion emphasizes the importance of this debate for the critical methodological question of how theory choice is effected in economics.

Kuhn Versus Lakatos, or Paradigms Versus Research Programmes in the History of Economics

In the 1950s and 1960s economists learned their methodology from Popper. Not that many of them read Popper. Instead, they read Friedman and perhaps a few of them realised that Friedman is simply Popper-witha-twist applied to economics. To be sure, Friedman was criticised, but the ‘Essay on the Methodology of Positive Economics’ nevertheless survived to become the one article on methodology that virtually every economist has read at some stage in his career. The idea that unrealistic ‘assumptions’ are nothing to worry about provided the theory deduced from them culminates in falsifiable predictions carried conviction to economists long inclined by habit and tradition to take a purely instrumentalist view of their subject. All that is almost ancient history, however. The new wave is not Popper's ‘falsifiability’ but Kuhn's ‘paradigms’. Again it is unlikely that many economists have read The Structure of Scientific Revolutions , but that is neither here nor there. Nevertheless, appeal to paradigmatic reasoning has quickly become a regular feature of controversies in economics and ‘paradigm’ is now the by-word of every historian of economic thought. Recently, however, some commentators have expressed misgivings about Kuhnian methodology applied to economics, throwing doubt in particular on the view that ‘scientific revolutions’ characterise the history of economic thought. With these doubts I heartily concur.

On "The Methodology of Positive Economics"]: Reply

Journal Article On “The Methodology of Positive Economics”: Reply Get access Eugene Rotwein Eugene Rotwein University of Wisconsin Search for other works by this author on: Oxford Academic Google Scholar The Quarterly Journal of Economics, Volume 76, Issue 4, December 1962, Pages 666–668, https://doi.org/10.2307/1879556 Published: 01 December 1962

On "The Methodology of Positive Economics": Comment

On "The Methodology of Positive Economics": Comment

On "The Methodology of Positive Economics"

I. Introduction, 554. — II. Friedman's main thesis evaluated, 556. — III. Other aspects of Friedman's argument considered, 564. — IV. Conclusion, 570.

Wesley C. Mitchell as an Economic Theorist

Wesley C. Mitchell as an Economic Theorist