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. (shrink)

ABSTRACT The status and role of Popper’s ‘Rationality Principle’ (RP) is still the subject of disputes. The ‘prevailing view’ among Popper’s commentators seems to be that RP is better interpreted as a methodological principle. Yet, this view is challenged in a recent study where RP is interpreted as an‘idealization’. We critically review these two accounts of RP and propose a novel one according to which RP is, first and foremost, the scientific version of a heuristic that ordinary people unconsciously use (...) when they seek to explain and predict other people’s behavior. However, we recognize that, to the extent RP is part of a methodological strategy whereby, in the wake of adverse empirical results, social scientists place the ‘onus of proof’ on their situational model it is legitimate to claim that RP is adopted, at least partly, for methodological reasons. Further, to the extent that the adoption of RP implies suppressing those mental processes that may affect actors’ reasoning and willpower it is also legitimate to claim that RP is, at least partly, an ‘idealization’. We conclude that the status and role of RP is multi-faceted and that the three accounts of RP complement each other. (shrink)

“Situational Analysis” (SA) constitutes Popper’s methodological proposal for the social sciences. We argue that notwithstanding Popper’s claim that SA is an attempt to extend the methodology of neoclassical economics to the rest of the social sciences, the former is better interpreted as an extension of his view of the “method” of history to the “theoretical” social sciences. The reason is that, unlike neoclassical economics, Popper’s formulation of SA presupposes that social scientists exhibit a “more complete” view of the “logic of (...) the situation” than individual actors do, on average, which implies that the latter’s knowledge is “partially wrong” or “incomplete.”. (shrink)

Popper’s ‘Situational Analysis’ (SA) constitutes his methodological proposal for the social sciences. We claim that the two hallmarks of SA are: (i) that scientists assume they possess a ‘wider’ view of the problem-situation than actors do, and (ii) use the model as an ideal ‘benchmark’ scenario to identify thedeviationof actors’ actual behaviour from the former. We argue that SA is not a generalization of the neoclassical theory of individual behaviour but captures instead the methodology adopted by modern behavioural economists. Last, (...) we argue that SA highlights a way of acquiring knowledge that has gone unnoticed in the literature. (shrink)

Popper's version of situational analysis, with its focus on the logic of situations and the rationality principle, fails to provide cogent explanations of the human decisions and actions underpinning social phenomena. It so fails because where he demanded objectivism and formalism in the social sciences, his substantive arguments lost contact with the psychological and subjectivist realities of the human realm. But Popper also devised some key elements of a social ontology. It is argued that although there are crucial gaps in (...) his ontology, it can be augmented to give situational analysis the potential to reach beyond pure logic and rationality and to bring social theory closer to grasping the real world of human action. (shrink)

Many methodologists are firmly convinced that Popper's arguments concerning the status of the rationality principle (RP) are incoherent or incompatible with the essentials of falsificationism. The present essay first shows that the accusation of incompatibility of situational logic with falsificationism does not hold up to scrutiny but then shows that Popper's arguments are nonetheless flimsy if not indefensible. For it seems that one can distinguish between two different versions of the RP in Popper's writings. If the first version is plainly (...) "objectivist" and can be characterized with Popper as empirically false, the second one is rather "subjectivist" and is not falsifiable as such. The essay shows that this second reading of the RP is the one that Popper finally adopts but that, unfortunately enough, this formulation of the RP looks more like a metaphysical statement than like an empirical law. It could then be held to be a priori valid as such, by analogy with Popper's line of argument concerning the principle of causality. If this is correct, then Popper's thesis on the empirical status of the RP is confuted. (shrink)

A constantly changing social reality means economic theories, even if correct today, need to be constantly revised, updated, or abandoned. To maintain an up-to-date understanding of its subject matter, economists have to continuously assess their theories even those that appear to be empirically corroborated. Economics could gain from a method that describes and is capable of generating novel explanatory hypotheses. A pessimistic view on the existence of such a method was famously articulated by Karl Popper in The Logic of Scientific (...) Discovery. He wrote ‘there is no such a thing as a logical method of having ideas or a logical reconstruction of this process.’ Herbert Simon responded to Popper and argued the opposite, namely, that there is a model of discovery and its name is abduction. Simon acknowledges his debt to Charles Peirce – the first modern logician to explicitly formulate a theory of abduction – and explains that abduction is a model of discovery that works as a problem-solving heuristic encoded.. (shrink)

This essay offers a history of the development of philosophy of economics from the 1830s until today, with a personal perspective on the developments of the last four decades. It argues that change...

In recent years, several authors have reconstructed the relationship between 20th-century economic theory and neuro-psychological research in terms of a three-stage narrative of initial unity, increasing separation, and ongoing reunification. In this article, I draw on major developments in economic theory and neuro-psychological research to provide a descriptive and normative critique of this reconstruction. Moreover, I put forward a reconstruction of the relationship between economics and neuro-psychology that, I claim, better fits both the available empirical evidence and the methodological foundations (...) of these disciplines. In doing so, I argue that recent calls to develop a unified interdisciplinary framework for modeling choice are premised on disputable presuppositions concerning both the domain of economic theory and the relationship between this theory’s axiomatic foundations and empirical findings about the neuro-psychological substrates of choice. (shrink)

In his biography of Karl Popper, Malachi Hacohen brilliantly reconstructs the development of Popper's ideas through 1946, correcting many errors regarding the sequence of their emergence. In addition he recreates Popper's Vienna and provides insights into Popper's complex personality. A larger goal of Hacohen's narrative is to show the relevance of Popper's philosophical and political thought for the left. Unfortunately this leads him to neglect and distort certain aspects of the story he tells, particularly when it comes to the relationship (...) between Popper and F.A. Hayek. (shrink)

Karl Popper (1902-1994) was one of the most influential philosophers of science of the 20th century. He made significant contributions to debates concerning general scientific methodology and theory choice, the demarcation of science from non-science, the nature of probability and quantum mechanics, and the methodology of the social sciences. His work is notable for its wide influence both within the philosophy of science, within science itself, and within a broader social context. Popper’s early work attempts to solve the problem of (...) demarcation and offer a clear criterion that distinguishes scientific theories from metaphysical or mythological claims. Popper’s falsificationist methodology holds that scientific theories are characterized by entailing predictions that future observations might reveal to be false. When theories are falsified by such observations, scientists can respond by revising the theory, or by rejecting the theory in favor of a rival or by maintaining the theory as is and changing an auxiliary hypothesis. In either case, however, this process must aim at the production of new, falsifiable predictions. While Popper recognizes that scientists can and do hold onto theories in the face of failed predictions when there are no predictively superior rivals to turn to. He holds that scientific practice is characterized by its continual effort to test theories against experience and make revisions based on the outcomes of these tests. By contrast, theories that are permanently immunized from falsification by the introduction of untestable ad hoc hypotheses can no longer be classified as scientific. Among other things, Popper argues that his falsificationist proposal allows for a solution of the problem of induction, since inductive reasoning plays no role in his account of theory choice. Along with his general proposals regarding falsification and scientific methodology, Popper is notable for his work on probability and quantum mechanics and on the methodology of the social sciences. Popper defends a propensity theory of probability, according to which probabilities are interpreted as objective, mind-independent properties of experimental setups. Popper then uses this theory to provide a realist interpretation of quantum mechanics, though its applicability goes beyond this specific case. With respect to the social sciences, Popper argued against the historicist attempt to formulate universal laws covering the whole of human history and instead argued in favor of methodological individualism and situational logic. Table of Contents 1. Background 2. Falsification and the Criterion of Demarcation a. Popper on Physics and Psychoanalysis b. Auxiliary and Ad Hoc Hypotheses c. Basic Sentences and the Role of Convention d. Induction, Corroboration, and Verisimilitude 3. Criticisms of Falsificationism 4. Realism, Quantum Mechanics, and Probability 5. Methodology in the Social Sciences 6. Popper’s Legacy 7. References and Further Reading a. Primary Sources b. Secondary Sources -/- . (shrink)

This is a comprehensive anthology of works concerning the nature of economics as a science, including classic texts and essays exploring specific branches and schools of economics. Apart from the classics, most of the selections in the third edition are new, as are the introduction and bibliography. No other anthology spans the whole field and offers a comprehensive introduction to questions about economic methodology.

This PhD thesis focuses on the philosophical foundations of Neuroeconomics, an innovative research program which combines findings and modelling tools from economics, psychology and neuroscience to account for human choice behaviour. The proponents of Neuroeconomics often manifest the ambition to foster radical modifications in the accounts of choice behaviour developed by its parent disciplines. This enquiry provides a philosophically informed appraisal of the potential for success and the relevance of neuroeconomic research for economics. My central claim is that neuroeconomists can (...) help other economists to build more predictive and explanatory models, yet are unlikely to foster revolutionary modifications in the economic theory of choice. The contents are organized as follows. In chapters 1-2, I present neuroeconomists’ investigative tools, distinguish the most influential approaches to neuroeconomic research and reconstruct the case in favour of a neural enrichment of economic theory. In chapters 3-7, I combine insights from neuro-psychology, economic methodology and philosophy of science to develop a systematic critique of Neuroeconomics. In particular, I articulate four lines of argument to demonstrate that economists are provisionally justified in retaining a methodologically distinctive approach to the modelling of decision making. My first argument points to several evidential and epistemological concerns which complicate the interpretation of neural data and cast doubt on the inferences neuroeconomists often make in their studies. My second argument aims to show that the trade-offs between the modelling desiderata that neuroeconomists and other economists respectively value severely constrain the incorporation of neural insights into economic models. My third argument questions neuroeconomists’ attempts to develop a unified theory of choice behaviour by identifying some central issues on which they hold contrasting positions. My fourth argument differentiates various senses of the term ‘revolution’ and illustrates that neuroeconomists are unlikely to provide revolutionary contributions to economic theory in any of these senses. (shrink)

This dissertation addresses a debate about the proper relationship between democratic theory and institutions. The debate has been waged between two rival approaches: on the one side is an aggregative and economic theory of democracy, known as constitutional economics, and on the other side is deliberative democracy. The two sides endorse starkly different positions on the issue of what makes a democracy legitimate and stable within an institutional setting. Constitutional economists model political agents in the same way that neoclassical economists (...) model economic agents, that is, as self-regarding, rational maximizers; so that evaluations of democratic legitimacy and stability depend on the extent to which the design of institutional rules and practices maximize individual utility by promoting efficient schemes of collective choice. Deliberative democrats, on the other hand, understand political agents as communicative reason-giving subjects who justify their preferences and positions on issues that jointly affect them in a process of consensus-directed discourse, or deliberation; so that evaluations of democratic legitimacy and order depend on the degree to which institutional norms and practices promote deliberation and draw upon deliberated public judgment. I argue that despite the numerous incompatibilities between constitutional economics and deliberative democracy—which amount to a 'deep divide'—an opportunity to produce a genuine synthesis of the two approaches arises inasmuch as it is possible to overcome several points of opposition in their separate research programmes. The central thesis of the dissertation is that it is possible to construct a bridge spanning the divide between constitutional economists and deliberative democrats, and that Dewey and Bentley's transactional view can facilitate this bridge-building project. Pursuant to this end, the points of opposition between the v research programmes are mediated by way of five concepts which, on balance, favor deliberative democracy and its feasible institutionalization. (shrink)

Introducir un recorrido a través de la historia y la teoría propia de la filosofía dela economía es una tarea del todo ambiciosa, sin embargo, Mariusz Maziarz lo lleva adelante en esta obra, que se puede considerar un manual actualizado de la filosofía de la economía y, en particular, de la epistemología de la economía. Aun-que no es un libro de historia del pensamiento económico ni de historia de la filosofía de las ciencias, sino más bien una iniciación ordenada a (...) los problemas de la epistemología de la economía, ellos se fundan en la filosofía de la ciencia y están atravesados por cuestiones y debates históricos. Quizás algo de eso sea aquello que Maziarz quiere desenredar en este texto. (shrink)

The disagreement about intertemporal coordination between Austrians and Keynesians is explained pointing out to differences both in the way expectations and motivations are treated and the methodological principles assumed by each view. Austrians believe that research should proceed showing first what guarantees a successful coordination in individualsŠ plans, and only latter showing which could hinder the “natural” course. Keynes, on the contrary, do not start with any ideal state of affairs, but allows economies to work either “good” or “bad” according (...) to the prevailing expectations among entrepreneurs. In this way uncertainty and expectations are fully incorporated into economic theory. A link between Austrian approach and popperian situational analysis is suggested. (shrink)

El presente trabajo intenta profundizar en la noción de racionalidad y la lógica de la situación de Karl Popper en el marco del debate entre “economía sustantiva” y “economía formal o instrumental”. Con tal propósito realizaremos una breve aproximación histórica al concepto de racionalidad económica señalando los distintos aportes de diversos autores a la cuestión. Este marco histórico permitirá encuadrar el planteo que Karl R. Popper hace de la lógica de la situación como metodología de las ciencias sociales tomada de (...) la teoría económica. En cuanto a la racionalidad y la lógica de la situación en Popper distinguiremos algunas notas acerca del análisis situacional y de la noción de racionalidad que subyace al mismo. Analizaremos el principio de racionalidad y el debate en torno al status epistemológico de tal principio. (shrink)