Seduced by Milton yet?
by Benjamin on January 16, 2009
It seems the more I keep reading Milton Friedman’s “Methodology of Positive Economics” (1966) the more his arguments make sense, and the more I find myself agreeing that theory can and should come from unrealistic assumptions. I only arrive at this exact terminology after an hour arguing that clearly and precisely stated assumptions serve as good starting points because we can avoid all the politics and ambiguity of old theoreticians who hid their assumptions – which is Milton’s point. By using logic we can then go from the assumptions to the conclusion, and we leave ourselves open to scientific debate (not ideological fights) and can debate either our clearly stated assumptions, or some fault in our logic. I grant that fixing illogical faults can be called progress, but what can you do with an assumption? Nothing.
Our Lady of Assumption Primary School, Liverpool, UK.
You can try a different assumption and maybe get a different outcome. Then what? If the assumptions are unassailable, our scientific progress is reduced to fixing the logic. But fixing the logic in models of Martian space invasion models may be a very redundant form of progress…
Our Lord of Assumption, Chicago School, Chicago IL.
Jokes aside once the door to other sciences is open, I find solace in the fact that the positive method might not be the only way forward… And for every argument we as economists make for the positive method there seems to be an answer and a way out. “Economist’s don’t have a controlled environment for experiments”; neither do astronomers but they are doing rather well with empirics and realistic assumptions. “We can’t do empirics independent of theory and assumptions”; but large control group experiments, devoid of theory, seems to be working for medicine and chemistry, and is making inroads in development economics… “We can’t directly observe some of the things we are interested in” (e.g. utility, preference); Psychology and physics still manage amazing things with that problem, despite no positivism. “Field work is not practical and can give you skewed results”; and yet the anthropologists and linguists keep going into the field, and do science. “The data series is too small / sporadic for empirical work”; Biologists (particularly evolutionary ones) have that problem, but seem to be coping – of course financial economists are spoiled on data, as are most economists. “Without the positive method and axioms, economics is not scientific”; … So what is all the above people doing then?
Tags: Heterodox Economics, Milton Friedman, Positive Economics
