Economic Methodology: A Historical Introduction (Economics as Social Theory)
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Ever since the inception of economics over two hundred years ago, the tools at the discipline’s disposal have grown more and more more sophisticated. This book provides a historical introduction to the methodology of economics through the eyes of economists.
The story begins with John Stuart Mill's seminal essay from 1836 on the definition and method of political economy, which is then followed by an examination of how the actual practices of economists changed over time to such an extent that they not only altered their methods of enquiry, but also their self-perception as economists. Beginning as intellectuals and journalists operating to a large extent in the public sphere, they then transformed into experts who developed their tools of research increasingly behind the scenes. No longer did they try to influence policy agendas through public discourse; rather they targeted policymakers directly and with instruments that showed them as independent and objective policy advisors, the tools of the trade changing all the while.
In order to shed light on this evolution of economic methodology, this book takes carefully selected snapshots from the discipline’s history. It tracks the process of development through the nineteenth and twentieth centuries, analysing the growth of empirical and mathematical modelling. It also looks at the emergence of the experiment in economics, in addition to the similarities and differences between modelling and experimentation.
This book will be relevant reading for students and academics in the fields of economic methodology, history of economics, and history and philosophy of the social sciences.
incorrect but abandons it only in a later phase of his research. Such criticisms clarify the character of the assumptions on which economists base their building of models. But in essence this kind of criticism fails to take account of the radical nature of Friedman’s provocation, since it assumes that economists are searching for a satisfactory representation of their object of study, an idea reinforced by the notion that economics conforms to the image of a laboratory science. If an experiment
depended on individual negotiations), Hong and Plott attempted to incorporate ‘several prominent economic features’ of the bulk freight industry into an experiment designed to test the efficiency of different pricing rules. ‘Incorporating prominent features’ meant they had to scale this particular market down to laboratory dimensions. The results were subsequently scaled up again to market level. Table 8.1 gives a schematic overview of the most important issues involved in the design and outcome
scaled-up diagram, was based on the various sources of information Hong and Plott had used to create the experimental schedules in the first place. The diagram for supply and demand curves in the target market was based on conjecture. It shows that the negotiated and target market prices and volumes were close to the scaled-up experimental equilibrium for most months, with the exception of October and November, when the demand curve shifted outwards. Hong and Plott argued that trading volume
departmental staff adding pieces of text that had earlier been removed, only to take them out again. This would go on until the absolutely final deadline for the report arrived. As a result, the Central Bank lost a great deal of its clout with the various organizations that dealt with socio-economic policy in the Dutch economy (an economy characterized by consultation and consensus). Simulation with models 155 Holtrop had never had much respect for the CPB’s ‘silly behavioural equations’, but
research. In the same tradition is Bruce Caldwell’s Beyond Positivism: Economic Methodology in the Twentieth Century (Allen & Unwin, 1982). Daniel Hausman’s The Inexact and Separate Science of Economics (Cambridge University Press, 1992) is firmly focused on analytical philosophy. Wade Hands’ Reflections without Rules (Cambridge University Press, 2001) is a brilliant synthesis of general philosophy of science and economic methodology, although it focuses rather less on the practice of economic