Most methodological writing on economics is by economists. Although the bulk is produced by lesser members of the profession, almost all leading economists have at one time or another tried their hand at methodological reflection. The results are usually poor. If one read only their methodology, one would have a hard time understanding how Milton Friedman or Paul Samuelson could possibly win Nobel Prizes. It thus is less surprising that the economics profession professes such scorn for philosophizing than that its (...) members spend so much of their time doing it.Methodological reflections on economics pose other puzzles, too. Although this literature is heavily influenced by philosophy—both current and, especially, out-dated—, it is cut off from philosophical discourse. This quasi-autonomy is puzzling, since this literature is concerned with questions that appear to be instances of, if not the same as the questions with which philosophers of science are concerned. (shrink)

This chapter contains sections titled: Economics and Philosophy of Economics Six Central Methodological Problems Inexactness, Ceteris Paribus Clauses, and “Unrealistic Assumptions” Contemporary Directions in Economic Methodology Conclusion References.

This essay argues for two conclusions. First, clinical decision-making is not best thought of as analogous to the purchase of other services, such as car repair. Health-care decision-making is far more difficult, collaborative, emotionally fraught, and subject to cognitive distortions. Second, the provision of health care should not be delegated to unregulated markets. Unlike other markets, there is no reason to expect health-care market outcomes to be efficient or fair or to promote individual freedom, properly conceived. Markets may play an (...) important role in implementing an allocation of healthcare, but they are not an ethically acceptable alternative to determining what that allocation should be. (shrink)

In Preference, Value, Choice, and Welfare, I argued, among other things, that preferences in economics are and ought to be total subjective comparative evaluations, that the theory of rational choice is a reformulation of everyday folk-psychological explanations and predictions of behaviour, and that revealed preference theory is completely untenable. All three of these theses have been challenged in essays by Erik Angner (2018), Francesco Guala (2019) and Johanna Thoma (2021a, 2021b). This essay responds to these criticisms and defends these three (...) theses. (shrink)

In ordinary circumstances, human actions have a myriad of unintended and often unforeseen consequences for the lives of other people. Problems of pollution are serious examples, but spillovers and side effects are the rule, not the exception. Who knows what consequences this essay may have? This essay is concerned with the problems of justice created by spillovers. After characterizing such spillovers more precisely and relating the concept to the economist's notion of an externality, I shall then consider the moral conclusions (...) concerning spillovers that issue from a natural rights perspective and from the perspective of welfare economics supplemented with theories of distributive justice. I shall argue that these perspectives go badly awry in taking spillovers to be the exception rather than the rule in human interactions. I. Externalities Economists have discussed spillovers under the heading of “externalities.” To say this is not very helpful, since there is so much disagreement concerning both the definition and significance of externalities. (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...

This book offers a comprehensive overview of the structure, strategy and methods of assessment of orthodox theoretical economics. In Part I Professor Hausman explains how economists theorise, emphasising the essential underlying commitment of economists to a vision of economics as a separate science. In Part II he defends the view that the basic axioms of economics are 'inexact' since they deal only with the 'major' causes; unlike most writers on economic methodology, the author argues that it is the rules (...) that economists espouse rather than their practice that is at fault. Part III links the conception of economics as a separate science to the fact that economic theories offer reasons and justifications for human actions, not just their causes. With its lengthy appendix introducing relevant issues in philosophy of science, this book is a major addition to philosophy of economics and of social science. (shrink)

Understanding moral philosophy can help one to do economics better, and philosophers can learn by drawing on economic insights and analytical tools. This book argues that standard views of rationality lead economists to espouse questionable moral principles, and discusses methods of economic evaluation in terms of welfare and other moral criteria. It also contains a brief discussion of the relevance of social choice and game theory to philosophy. There is a glossary and at the end of each chapter are suggestions (...) for further reading. (shrink)

This commentary argues that the problems identified in Kenneth V. Iserson’s Essay, “Do you Believe in Magic? Shove, Don’t Nudge: Advising Patients at the Bedside,” are perennial difficulties to which there is no single simple solution. In particular, recent work in psychology offers little help to caregivers, who are in the difficult position of guiding the decisions of their patients while respecting them and ultimately deferring to their wishes.

This book is about preferences, principally as they figure in economics. It also explores their uses in everyday language and action, how they are understood in psychology and how they figure in philosophical reflection on action and morality. The book clarifies and for the most part defends the way in which economists invoke preferences to explain, predict and assess behavior and outcomes. Hausman argues, however, that the predictions and explanations economists offer rely on theories of preference formation that are (...) in need of further development, and he criticizes attempts to define welfare in terms of preferences and to define preferences in terms of choices or self-interest. The analysis clarifies the relations between rational choice theory and philosophical accounts of human action. The book also assembles the materials out of which models of preference formation and modification can be constructed, and it comments on how reason and emotion shape preferences. (shrink)

This book, by one of the pre-eminent philosophers of science writing today, offers the most comprehensive account available of causal asymmetries. Causation is asymmetrical in many different ways. Causes precede effects; explanations cite causes not effects. Agents use causes to manipulate their effects; they don't use effects to manipulate their causes. Effects of a common cause are correlated; causes of a common effect are not. This book explains why a relationship that is asymmetrical in one of these regards is asymmetrical (...) in the others. Hausman discovers surprising hidden connections between theories of causation and traces them all to an asymmetry of independence. This is a major book for philosophers of science that will also prove insightful to economists and statisticians. (shrink)

With the collapse of the centrally controlled economies and the authoritarian governments of Eastern Europe and the former Soviet republics, political leaders are, with appreciable public support, espousing “liberal” economic and political transformations—the reinstitution of markets, the securing of civil and political rights, and the establishment of representative governments. But those supporting reform have many aims, and the liberalism to which they look for political guidance is not an unambiguous doctrine.

This essay begins by summarizing the reasons why unregulated health-care markets are inefficient. The inefficiencies stem from the asymmetries of information among providers, patients and payers, which give rise to moral hazard and adverse selection. Attempts to ameliorate these inefficiencies by means of risk-adjusted insurance and monetary incentives such as co-pays and deductibles lessen the inefficiencies at the cost of increasing inequalities. Another possibility is to rely on non-monetary incentives, including ordeals. While not a magic bullet, these are feasible methods (...) for addressing the inadequacies of market provision of health care, such as moral hazard. (shrink)

The paper reconsiders social scientific naturalism, the view that despite obvious differences in their subject matter, the social sciences belong to the same species of cognitive inquiry as the natural sciences. Among other limits, the paper explores social scientific naturalism only with respect to economics. The social sciences are not homogeneous, and although many of the things I shall say apply to psychology, political science, sociology, and anthropology as well as to economics, I do not have the space to consider (...) the many varieties of social inquiries. After a historical introduction in Section 5.1, Sections 5.2 and 5.3 clarify what is being asked when one raises the question of whether economics is relevantly similar to the natural sciences and why the question is worth asking. Section 5.4 then considers arguments to the effect that the subject matter of economics – namely human beings and their behavior – cannot be the subject of scientific inquiry. Sections 5.5 and 5.6 focus on an important peculiarity of economics and the other social sciences, namely, that it employs concepts that are continuous with those of daily life. This fact turns out to have considerable ramifications. Section 5.7 concludes. (shrink)

This essay explains what the Causal Markov Condition says and defends the condition from the many criticisms that have been launched against it. Although we are skeptical about some of the applications of the Causal Markov Condition, we argue that it is implicit in the view that causes can be used to manipulate their effects and that it cannot be surrendered without surrendering this view of causation.

If, as is alleged, challenge trials of vaccines against COVID-19 are likely to save thousands of lives and vastly diminish the economic and social harms of the pandemic while subjecting volunteers to risks that are comparable to kidney donation, then it would seem that the only sensible objection to such trials would be to deny that they have low risks or can be expected to have immense benefits. This essay searches for a philosophical rationale for rejecting challenge trials while supposing (...) that they have huge benefits and relatively low risks. Although it finds some force in objections to challenge trials grounded in the obligations of researchers to limit the harms imposed on some individuals for the benefit of others, it argues that there is no compelling objection to challenge trials of vaccines for COVID-19—if they have the benefits and risks that have been claimed. (shrink)

This essay develops an account of health, the functional efficiency theory, which derives from Christopher Boorse's biostatistical theory. Like the BST, the functional efficiency theory is a nonevaluative view of health, but unlike the BST, it argues that the fundamental theoretical task is to distinguish levels of efficiency with which the parts and processes within organisms and within systems within organisms function. Which of these to label as healthy or pathological is of secondary importance. Because the statistical distributions that Boorse's (...) account relies on are distributions of functional efficiency, the functional efficiency theory arguably complements rather than challenges the BST. (shrink)

In Global Health Impact, Nicole Hassoun joins the ranks of those defending a right to health. Unlike the World Health Organization, which views this right expansively, Hassoun would limit the right to the health needed to enjoy a minimally good life. This essay argues that this right is difficult to specify and insufficient to support the policies Hassoun defends. The essay sketches an alternative view of the obligations of institutions to address health problems that derives from imperfect individual duties to (...) aid those who are doing badly or who are at risk of harm. (shrink)

This essay argues that what is central to Christopher Boorse’s biostatistical theory of disease as statistically subnormal part function (BST) are comparisons of the “functional efficiency” of parts and processes and that statistical considerations serve only to pick out a healthy level of functional efficiency. On this interpretation, the distinction between health and pathology is less important than comparisons of functional efficiency, which are entirely independent of statistical considerations. The clarifications or revisions of the BST that this essay offers are (...) friendly amendments that render moot some of the most prominent criticisms of Boorse’s account. (shrink)

The tenuous claims of cost-benefit analysis to guide policy so as to promote welfare turn on measuring welfare by preference satisfaction and taking willingness-to-pay to indicate preferences. Yet it is obvious that people's preferences are not always self-interested and that false beliefs may lead people to prefer what is worse for them even when people are self-interested. So welfare is not preference satisfaction, and hence it appears that cost-benefit analysis and welfare economics in general rely on a mistaken theory of (...) well-being. This essay explores the difficulties, criticizes standard defences of welfare economics, and then offers a new partial defence that maintains that welfare economics is independent of any philosophical theory of well-being. Welfare economics requires nothing more than anevidentialconnection between preference and welfare: in circumstances in which people are concerned with their own interests and reasonably good judges of what will serve their interests, their preferences will be reliable indicators of what is good for them. (shrink)

1 Overview of the problem2 Situationally Specific Normal Functioning and Capacities3 Kingma’s Criticism4 How Normal Responses can be Pathological5 Too Many Pathologies?6 Conclusions.

This essay criticizes the proposal recently defended by a number of prominent economists that welfare economics be redirected away from the satisfaction of people's preferences and toward making people happy instead. Although information about happiness may sometimes be of use, the notion of happiness is sufficiently ambiguous and the objections to identifying welfare with happiness are sufficiently serious that welfare economists are better off using preference satisfaction as a measure of welfare. The essay also examines and criticizes the position associated (...) with Daniel Kahneman and a number of co-authors that takes welfare to be ‘objective happiness’ – that is, the sum of momentary pleasures. (shrink)

The notion of ‘revealed preference’ is unclear and should be abandoned. Defenders of the theory of revealed preference have misinterpreted legitimate concerns about the testability of economics as the demand that economists eschew reference to (unobservable) subjective states. As attempts to apply revealed-preference theory to game theory illustrate with particular vividness, this demand is mistaken.

expose some gaps and difficulties in the argument for the causal Markov condition in our essay ‘Independence, Invariance and the Causal Markov Condition’ ([1999]), and we are grateful for the opportunity to reformulate our position. In particular, Cartwright disagrees vigorously with many of the theses we advance about the connection between causation and manipulation. Although we are not persuaded by some of her criticisms, we shall confine ourselves to showing how our central argument can be reconstructed and to casting doubt (...) on Cartwright's claim that the causal Markov condition typically fails when there are indeterministic by-products. Why believe the causal Markov condition? Causation and manipulation The argument Indeterministic by-products and the causal Markov condition The chemical factory counterexample and PM2 Conclusions: causation and manipulability. (shrink)

This essay examines the critique of behavioral economics that Infante, Lecouteaux and Sugden offer in:"Preference Purification and the Inner Rational Agent.” It identifies and questions three main criticisms that ILS make: a methodological criticism, alleging that there is no psychological basis for the attribution of purified preferences, an epistemological criticism, alleging that there is little evidence for claims about purified preferences, and a normative criticism, arguing that policies should aim to facilitate people’s choices rather than to satisfy purified preferences. The (...) essay also distinguishes the view of welfare economics defended in Preference, Value, Choice, and Welfare from the claims of behavioral economists ILS criticize. (shrink)

This essay attempts to distinguish the pressing issues for economists and economic methodologists concerning realism in economics from those issues that are of comparatively slight importance. In particular I shall argue that issues concerning the goals of science are of considerable interest in economics, unlike issues concerning the evidence for claims about unobservables, which have comparatively little relevance. In making this argument, this essay raises doubts about the two programs in contemporary economic methodology that raise the banner of realism. In (...) particular I argue that the banner makes it more difficult to relate the concerns of those who wave it to those of other methodologists. Although this essay argues that many of the debates in this century between scientific realists and their opponents are not relevant to economics, it does not attack scientific realism, and it does not urge economists or economic methodologists to reject it. (shrink)

An anthology of works on the philosophy of economics, including classic texts and essays exploring specific branches and schools of economics. Completely revamped, this edition contains new selections, a revised introduction and a bibliography. The volume contains 26 chapters organized into five parts: Classic Discussions, Positivist and Popperian Views, Ideology and Normative Economics, Branches and Schools of Economics and Their Methodological Problems and New Directions in Economic Methodology. It includes crucial historical contributions by figures such as Mill, Marx, Weber, Robbins, (...) Knight, and Veblen and works by most of the leading contemporary figures writing on economic methodology, including five Nobel Laureates in Economics. (shrink)

This collection brings together the essays of one of the foremost American philosophers of economics. Cumulatively they offer fresh perspectives on foundational questions such as: what sort of science is economics? and how successful can economists be in acquiring knowledge of their subject matter?

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.

Preferences are the central notion in mainstream economic theory, yet economists say little about what preferences are. This article argues that preferences in mainstream positive economics are comparative evaluations with respect to everything relevant to value or choice, and it argues against three mistaken views of preferences: (1) that they are matters of taste, concerning which rational assessment is inappropriate, (2) that preferences coincide with judgments of expected self-interested benefit, and (3) that preferences can be defined in terms of choices.

This paper argues that egalitarian theories should be judged by the degree to which they meet four different challenges. Fundamentalist egalitarianism, which contends that certain inequalities are intrinsically bad or unjust regardless of their consequences, fails to meet these challenges. Building on discussions by T.M. Scanlon and David Miller, we argue that egalitarianism is better understood in terms of commitments to six egalitarian objectives. A consequence of our view, in contrast to Martin O'Neill's “non-intrinsic egalitarianism,“ is that egalitarianism is better (...) understood as a family of views than as a single ethical position. (shrink)

While very much in Sen's camp in rejecting revealed preference theory and emphasizing the complexity, incompleteness, and context dependence of preference and the intellectual costs of supposing that all the factors influencing choice can be captured by a single notion of preference, this essay contests his view that economists should recognize multiple notions of preference. It argues that Sen's concerns are better served by embracing a single conception of preference and insisting on the need for analysis of the multiple factors (...) that determine ‘preference’ so conceived. (shrink)