The Inexact and Separate Science of Economics

Cover......Page 1
Frontmatter......Page 2
Contents......Page 8
List of figures......Page 12
Dedication......Page 13
What is economics?......Page 14
Methodology and the problem of theory assessment......Page 16
A reader\'s guide......Page 18
Sources and acknowledgments......Page 21
Part I - Introduction, structure, and strategy......Page 24
1.1 Rational preference and choice in conditions of certainty......Page 26
1.2 Ordinal utility functions......Page 30
1.3 Revealed-preference theory......Page 32
1.4 Rationality and uncertainty: expected utility theory......Page 35
2.1 Market demand for consumption goods......Page 41
2.2 The theory of consumer choice......Page 43
2.3 Market demand and individual demand functions......Page 46
2.4 The model of a simple consumption system......Page 47
2.5 Deriving individual demand......Page 49
2.6 Bootstrapping and evidential weakness......Page 52
3.1 Market supply of consumption goods and the theory of the firm......Page 55
3.2 Market supply and the supply function of a firm......Page 57
3.3 The model of a simple competitive production system......Page 58
3.4 Deriving a simple competitive firm\'s supply function......Page 59
3.5 Market equilibrium and supply and demand explanations......Page 61
3.6 Microeconomic theory......Page 64
3.7 Microeconomics and general equilibrium theory......Page 67
4.1 Welfare and the satisfaction of preferences......Page 70
4.2 Pareto efficiency, Pareto improvements, and market failures......Page 73
4.3 The two fundamental theorems of theoretical welfare economics......Page 75
4.4 Cost-benefit analysis......Page 76
4.5 Arrow\'s theorem and social welfare theory......Page 77
4.6 Rationality and benevolence: the moral authority of economists......Page 78
5.1 Logical positivism and the nature of scientific theory......Page 83
5.2 Semantic and predicate views of theories......Page 85
5.3 Theories and models in economics......Page 91
6.1 Disciplinary matrices......Page 96
6.2 Research programs......Page 98
6.3 The structure of economics......Page 101
6.4 The vision of economics as a separate science......Page 103
6.5 The strategy of the separate science of economics......Page 108
6.6 Methodological individualism, rational choice and the separate science of economics......Page 110
6.7 The function of abstract general equilibrium theories......Page 111
7 - Overlapping generations: a case study......Page 115
7.1 The basic model......Page 116
7.2 Stationary and constant growth cases......Page 118
7.3 \"Hump-saving\" and social welfare......Page 119
7.4 On the reception and influence of Samuelson\'s model......Page 122
7.5 Concluding remarks: on the grip of neoclassical modeling......Page 131
Part II - Theory assessment......Page 134
8 - Inexactness in economic theory......Page 136
8.1 What is an inexact science?......Page 138
8.2 The meaning or truth conditions of qualified laws......Page 146
8.3 The justification of inexact laws......Page 152
8.4 The deductive method......Page 155
8.5 Qualms......Page 162
9 - Methodological revolution......Page 165
9.1 Terence Hutchison and the initial challenge......Page 166
9.2 Paul Samuelson\'s \"operationalism\"......Page 169
9.3 Fritz Machlup and logical empiricism......Page 171
9.4 Friedman\'s pragmatic instrumentalism......Page 175
9.5 Conclusion: Koopmans\' restatement of the difficulties......Page 182
10.1 The problems of demarcation......Page 185
10.2 Logical falsifiability and Popper\'s solution to the problem of induction......Page 188
10.3 Falsificationism as a methodology -- as norms to govern science......Page 193
10.4 Decisions, evidence, and scientific method......Page 197
10.5 Why are economic theories unfalsifiable?......Page 201
11.1 Sophisticated methodological falsificationism......Page 205
11.2 The appraisal of scientific research programs......Page 208
11.3 Why the methodology of scientific research programs cannot work......Page 209
11.4 Further comments on induction, falsification, and verification......Page 213
11.5 Concluding remarks on Popperian and Lakatosian methodology......Page 216
12 - Economics as an inexact and separate science......Page 218
12.1 Apparent dogmatism and the weak-link principle......Page 219
12.2 Why believe equilibrium theory?......Page 222
12.3 Do economists follow the inexact deductive method?......Page 224
12.4 Expected utility theory and its anomalies......Page 225
12.5 The economists\' deductive method......Page 234
12.6 The deductive method and the demands of policy......Page 236
12.7 Conclusion -- economics as a separate science......Page 237
13.1 The discovery of preference reversals......Page 240
13.2 Grether and Plott\'s experiments......Page 243
13.3 Dogmatism and the commitment to economics as a separate science......Page 247
13.4 Further responses by economists......Page 249
13.5 Preference reversals and \"procedure invariance\"......Page 253
Part III - Conclusion......Page 258
14.1 The hegemony of equilibrium theory......Page 260
14.2 How to do economics......Page 266
14.3 Epistemology, methodology, and the practice of economics......Page 276
15.1 The structure and strategy of neoclassical theoretical economics......Page 283
15.2 Appraising microeconomics and general equilibrium theory......Page 287
15.3 Reasons and causes: rationality and economic behavior......Page 290
Appendix: An introduction to philosophy of science......Page 294
A.1 Historical and philosophical background......Page 296
A.2 The goals of science: realism versus instrumentalism......Page 298
A.3 Scientific explanation......Page 301
A.4 Laws......Page 305
A.5 Causality, laws, and explanation......Page 307
A.6 Scientific theories and models......Page 310
A.7 Theory and observation......Page 311
A.8 Paradigms and research programs......Page 313
A.9 Scientific discovery......Page 314
A.10 Testing and assessing scientific theories......Page 315
A.11 The problem of induction......Page 325
A.12 The problem of demarcation......Page 327
A.13 Scientific \"method\"......Page 330
A.14 Social theory and the unity of science......Page 332
A.15 Concluding philosophical remarks......Page 342
Bibliography......Page 343
Index......Page 373