Search

A principal source of interest in behavioral economics has been its advertised contributions to policies aimed at 'nudging' people away from allegedly natural but self-defeating behavior toward patterns of response thought more likely to improve their welfare. This has occasioned controversies among economists and philosophers around the normative limits of paternalism, especially by technical policy advisors. One recent suggestion has been that 'boosting', in which interventions aim to enhance people's general cognitive skills and representational repertoires instead of manipulating their choice environments behind their backs, avoids the main normative challenges. A limitation in most of this literature is that it has focused on relatively sweeping policy recommendations and consequently on strong polar alternatives of general paternalism and strict laissez faire. We review a real instance, drawn from a consulting project we conducted for an investment bank, of a proposed intervention that is more typical of the kind that economists are more often actually called upon to offer. In this example, the sophistication of current tools for preference attribution, combined with philosophical externalism about the semantics of preferences that makes it less plausible to attribute their literal self-conscious representation to people as propositional attitude content becomes more tightly refined, blocks applicability of the distinction between nudging and boosting. This seems to call for irreducible, context-specific ethical judgment in assessing the appropriateness of the forms of paternalism that economists must actually wrestle with in going about their everyday business.

Carl Menger's methodology describes reality as neatly organized, being constructed additively from strictly regular simple elements called pure types. Such a conception of the world's structure seems to invite mathematical treatment. Yet, his economics is not a mathematical one, and he even explicitly rejected mathematical approach to economics. This apparent puzzle is explained by Menger's failure to deliver in his methodological writings a realistic portrayal of what he was actually doing in his economics. His implicit ambition to retain the full meaning of the natural language concepts while using them simultaneously as theoretical concepts makes his economics dependent on the general human knowledge. Because the latter is mostly non-mathematical, so has to remain the former. This makes his economics both richer as well as fuzzier as compared with mathematical economics. This seems to be the result of a deliberate decision to keep his economic theory more realistic.

In this monograph, Don Ross argues for a highly original view on economics vis-a-vis its immediate neighboring disciplines, that is, psychology and sociology. Ross develops his view on economics as...

Although it is often said that economics is too much like physics, to a physicist economics is not at all like physics. The difference is in the scientific methods of the two fields: theoretical economics uses a top down approach in which hypothesis and mathematical rigor come first and empirical confirmation comes second. Physics, in contrast, embraces the bottom up ‘experimental philosophy’ of Newton, in which ‘hypotheses are inferred from phenomena, and afterward rendered general by induction’. Progress would accelerates if economics were to truly make empirical verification the ultimate arbiter of theories, which would force it to open up to alternative approaches.

This paper discusses classification in Economics via the case of ‘heterodox economics (HE)’. It argues that the debate over HE reflects several important methodological issues: the need and motives for classification, and its consequences; dualism; and simplicity versus complexity. It presents four types of treatment of HE, which usually reach different conclusions about it. The paper argues that intellectual treatments suffer from problems of dualism: frequently offering strict, fixed, simple definitions of HE that are difficult to defend, especially in the light of recent developments in economics. For these reasons, sociological and psychological treatments have become preferred. These appear to avoid the problems faced by intellectual definitions and reflect existing social groups in economics. However, it is argued that these definitions are conceptually empty, still prone to dualism and reification. It is argued that all definitions reflect the sociology of the profession: dualist definitions of het...

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.

The main arguments currently held for and against the use of self-reports in economics are presented in their relation to well-known events in the history of the discipline: the ‘measurement without theory’, the ‘full-cost’, and the ‘economic expectations’ controversies. Doing so, the paper highlights the so far neglected role of George Katona's behavioral economics in these methodological discussions.

The image of economics got somewhat puzzling after the crisis of 2008. Many economists now doubt that economics is able to provide answers to some of its core questions. The crisis was not so fun for economics. However, this not so fun image of economics is not the only image in the eyes of the general public. When one looks at economics-made-fun (EMF) books (e.g. Freakonomics, The Undercover Economist, etc.), economics seems to be an explanatory science which is able to provide interesting, unconventional, entertaining and enlightening explanations for almost every aspect of our lives. Isn't there a great contradiction between these two images of economics? Not necessarily. The present paper explicates why. Nevertheless, the paper also shows that EMF books run the risk of creating a false sense of understanding and explains how one should read the basic insights provided by EMF books to remove this risk. The paper contrasts the EMF version of the explanation of the effects of mandatory seat belt laws wit...

The article suggests a list of principles that guide this new genre of popular writing in and on economics: the new kiosk economics of everything. These well-selling books seek to show how the simple ideas of economics are able to reveal hidden mechanisms that unify a surprising variety of everyday phenomena and by doing so entertain their readers and improve the public image of economics. It is also argued that there is a special limited sense in which this qualifies as scientific imperialism.

Several commentators have argued that the Economics-Made-Fun (“EMF”) genre contains very little actual economics. As such, it would seem that criticisms of EMF do not apply economics more broadly. In this paper I take a contrary view, arguing that, in fact, at a deep conceptual level, the engine of EMF analyses is precisely the engine of mainstream economics. Specifically, I argue that both EMF and mainstream economics rest on a conceptual foundation known as the Principal of the Substitution of Similars (“PSS”). Understanding how PSS leads EMF practitioners to make claims well beyond what is warranted by their analysis also offers insight into how PSS leaves mainstream economists in danger of overestimating the power and scope of their analyses. I explore the consequences of such problems through an example of economic analysis of the U.S. housing market in the lead-up to the recent financial crisis.

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 ...

This paper compares two aspects of the use of ‘fun’ within the economics profession. It analyzes the way in which a recently emerged genre of economics-made-fun uses fun and surprising insights to reach new audiences. And it also analyzes the way in which humor is used within and from outside the economics profession to criticize certain practices and characteristics of economists. It argues that the economics-made-fun genre, ‘Freakonomics’ being the prime example, not only redefines the domain of economics, as is widely acknowledged, but also changes the identity of economists. In a similar way, humor is used by both insiders and outsiders to (re)define the appropriate identity and domain of economists. It draws on recent work in the history of science which distinguishes between various professional identities of scientists, such as the quirky genius and the intuitive and playful amateur. We argue that Levitt and other authors within this new genre redefine the identity of economists toward this latter type. On the other hand, humor is often used by critics of this economistic outlook on life to show the limitations of this perspective and to delineate its appropriate domain.

Understanding economics as a (social) science? Marcel Boumans and John Davis, London: Palgrave Macmillan, 2010, x+210 pp., $45.00, ISBN 978-0-230-21813-0 In the sociology and philosophy of science ...

Douglass North is a pivotal figure in the development of the ‘new’ economic history as well as the ‘new’ institutional economics. However, the relationship between these two aspects of his thinking remains undeveloped in previous critical assessments of North's work. The relationship is clarified here. The evidence presented indicates that three distinct phases can be distinguished in his writings between the 1950s and the 2000s. The paper relates these changing views to the shifting mainstream within economics and the effects that this shift has in turn had on economic history research. Economic history has adapted to economic research by abandoning some practices associated with the earlier cliometric literature. Furthermore, North is unique to the extent that his recent writings represent something of a convergence with ‘old’ institutionalism.

Traditionally, evidence in economics has been seen in the context of theory choice. Much of recent methodological debate on the role of evidence has turned on the recognition that the status and role of evidence is somewhat more involved in economics than the conventional wisdom suggests. Rather than approaching this question in general terms from a starting point of philosophy of science or even science studies, our aim in this introduction to a symposium of articles on evidence in economics is to approach the question from the perspective of applied economics.

This paper evaluates the contribution of Marxian approaches to the evolution of development economics and the reasons for their current state of impasse, and suggests some areas in which this work may still be capable of providing useful contributions. Development economics was one of the few economics sub‐disciplines where Marxian approaches were considered to offer a key perspective and had a wider influence on more mainstream analysis. We explore how, during the 1970s and 1980s, Marxian analysis was published alongside other perspectives in development journals, producing theoretical and empirical work analysing the conditions under which capitalism in developing economies would continue to play a developmental role. We then consider the critical engagement with dependency theory that denied the possibility of independent capitalist development, as well as with more orthodox perspectives. The conclusion of leading proponents of Marxian development by the mid‐1980s, that such work had reached an impasse...

Since the mid‐1950s the spread of formal models and econometric method has greatly improved the study of the past, giving rise to the ‘new’ economic history; at the same time, the influence of economic history on economists and economics has markedly declined. This paper argues that the contribution of history to the advancement of economics is still paramount, as is evident from the evolution of monetary theory and institutions.JEL classification: NO1, A12

Economics and culture are in a complex, developing relation to each other. Yet, to introduce ‘culture’ into economic theory requires, first of all, an appropriate understanding of culture itself. The crucial point of this paper is that culture in its development and structure is only understandable if one considers it in connection with the autonomous structural development of the forms with which the subjects experience and construct their world. In recognition of the socio‐cultural organization of human society, there is no absolute autonomy of individuals in comparison to society and economics, while together with this interdependency the development of rationality exceeds mere instrumentality. Through ontogenesis, every individual is located ‘within the boundaries of society’. What are consequences for economic theory? First of all: Economics is a cultural science in a double sense. Its object is the changing world of economic phenomena that are bound in a very specific cultural context. However, cult...

Evolutionary economics is an increasingly influential but vaguely defined field of economic research. This article discusses different ways of defining evolutionary economics: at its object level, at the level of core concepts and, distinguishing between meaning determinist and meaning finitist interpretations, as a social institution. A meaning finitist interpretation of ‘evolutionary economics’, referring to evolutionary economics as a social institution, is suggested to provide a positive account of the diversity of attempts to define evolutionary economics, drawing from an evolutionary framework of the diffusion of labels denoting fields of research.

(2004). Reorienting Economics: On heterodox economics, themata and the use of mathematics in economics. Journal of Economic Methodology: Vol. 11, No. 3, pp. 329-340.

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.

Reiss' book is an important contribution to philosophy of economics, and in many ways it is a paradigm of how I believe philosophy of economics can fruitfully be done. I want to first discuss its g...

(2001). Methodological issues in new institutional economics. Journal of Economic Methodology: Vol. 8, No. 1, pp. 85-92.

Comparative perspectives in development economics make extensive use of qualitative and quantitative induction together with deduction, and some-times a narrative, to bring ‘facts’ together in an interrelated whole. It is a method of inquiry not allied to any single ‘world view’ though some development economists believe that comparative perspectives (or analytical economic history) are most representative of the classical tradition in development economics. Pattern modeling which is strongly associated with the inductive approach can take account of complexity and diversity, as well as uniformities, in the development experience.

Over the past two decades applied macroeconomics has been transformed by the widespread adoption of a set of new statistical techniques: unit-root tests, vector autoregressions, Granger causality and cointegration. Although these techniques were developed to answer statistical questions, they diffused very rapidly through applied economics because they were thought to be able to answer important theoretical questions in macroeconomics. This paper argues that these techniques have not delivered on the early promises; not because they were not useful - they are very useful for many purposes - but because economists expected too much: they wanted to believe that a statistical summary of the data (an estimate or test statistic) could answer an economic question without interpretation. The paper sets out the statistical motivation for the procedures; the economic questions they were supposed to answer; and the issues that arise in trying to answer economic questions about the sources of trends and cycles, ausa...

This is an assessment of two recent philosophical accounts of the nature of economics, those given in Alexander Rosenberg's Economics - Mathematical Politics or the Science of Diminishing Returns? (1992) and in Daniel Hausman's The Inexact and Separate Science of Economics (1992). The focus is on how they portray the predictive capabilities of economics and the links between economic theory and empirical evidence. Some major suggestions of the two books are found wanting in interesting ways. Examples are Rosenberg's explanation of the predictive weakness of economics in terms of its folk psychological roots and his depiction of economics as a branch of political philosophy and applied mathematics; and Hausman's claim that the ‘economists’ deductive method’ is appropriate while ‘economics as a separate science’ is not.