Is Economics a Science?

Is Economics a Science?

IS ECONOMICS A SCIENCE? Craig Vincent Mitchell, PhD Lecturer University of Texas in Arlington PART 1 The Nature of Science Types of Science Economics as Social Science

WHAT IS SCIENCE? Science is an empiricalinductive approach to knowledge. Empirical- knowledge from sensory experience Inductive- an informal type of logic based upon probability THE SCIENTIFIC METHOD Hypothesis- an unproved theory,

proposition or supposition Theory- a formulation of apparent relationships or underlying principles of certain observed phenomena which has been verified (or tested) to some degree Law- a sequence of events in nature that has been observed (or tested) with unvarying uniformity under the same conditions. There are not many laws of science. THE SCIENTIFIC METHOD

One progresses from a hypothesis to a theory by testing or observation One progresses from a theory to a law by testing or observation Each level provides an increased degree of certainty. Complete certainty cannot be achieved. THE HISTORY OF SCIENCE Francis Bacon wrote The Advancement of Learning

He argued that scientific knowledge results from continuously experimenting Observation and experimentation is the key to knowledge of the natural world SCIENTISM AND POSITIVISM

Scientism is the belief that all that can be known, must be known through the scientific process. Anything that cannot be known through the scientific process is nonsense. Most who hold this position are not scientists at all. The scientists who hold this position are generally naturalists Positivism is view that is similar to scientism. Positivism argues that science should be free of the influence of theology, metaphysics and value if it will reflect true knowledge. SCIENTISM The Post- Positivist

Physicalist philosopher, Wilfred Sellars, said that in the dimension of describing and explaining the world, science is the measure of all things, of what is that it is, and of what is not that it is not. SCIENCE AND POSTMODERNITY

Friedrich Nietzsche was the grandfather of postmodernity He thought that there is no objective truth He also believed that the world picture that physicists construct differs in no essential way from the subjective world picture Science is just another will to power POSTMODERNITY AND

SCIENCE The post-moderns did not believe that there is such a thing as objective truth They also believed that science is just another example of a will to power Science cannot get to the truth because there is no truth Science points to no objective truth: theory of relativity, Heisenberg uncertainty principle Science cannot answer such things as: the

Heisenberg uncertainty principle, psychotherapy, Post-modernity does not put faith and science i TWO VIEWS OF SCIENCE Scientific Realists believe that science get to the truth Scientific Anti-Realists believe that science does not get to the truth Both sides have good reasons for their positions

SCIENTIFIC REALISM Scientific Realists believe that science gets to the truth because: The success of science- science provides so much new technology with increasing efficiency that science must get at the truth Mathematics- numbers and mathematics seem to mirror reality extremely well. This is a cause for the success of science. This

suggests a metaphysical basis for scientific realism. Science aims at truth (correspondence theory), thus requiring metaphysical realism. SCIENTIFIC REALISM Karl Popper wrote Conjectures and Refutations and The Logic of Scientific Discovery He believed that

science should be an empirical deductive method He believed that science requires testing KARL POPPER AND SCIENTIFIC REALISM

It is easy to find confirmation of the validity of theories Confirmation should only be considered if it results from a risky prediction The more that a theory forbids, the better it is. A theory that is not possibly refutable is a poor theory Genuine tests of theories are attempts to refute them The only good evidence is negative evidencei.e. an unsuccessful attempt to refute a particular theory SCIENTIFIC ANTI-REALISM

Problem of Under determination- for any given data set, there is an infinite number of theories that can explain it. One cannot test all of them so one cannot be sure that he has the right theory Instrumentalists believe that science does not get at the truth but it is useful. It denies semantic realism. It is also a type of phenomenalism Positivism- is a rejection of metaphysical realism Some argue that there is no scientific method because of the inconsistency of its use.

SCIENTIFIC ANTIREALISM David Hume was a scientific antirealist because of his argument against causation One can know that one thing follows another, but one cannot know that one thing causes another SCIENTIFIC ANTI

REALISM Thomas Kuhn wrote The Structure of Scientific Revolutions He argued that science is really about power Younger scientists test the existing paradigm, while older scientists maintain

the status quo and hold on to power SCIENTIFIC ANTI REALISM Bastian Van Fraassen is a professor of philosophy at Princeton University He wrote The Scientific Image and Laws and Symmetry He is a leading figure

among those who hold to anti realism in philosophy of SCIENCE AND VALUE: THE FACT/ VALUE DICHOTOMY David Hume is also known for his fact/value dichotomy, which argues that

1. there is no connection between facts and values. 2. facts are judged by reason, while values like morality and beauty are evaluated by emotions Conclusion: science has nothing to do with values. This view supports positivism. Both W.V.O. Quine and Ludwig Wittgenstein have destroyed this argument SCIENCE AND VALUE: THE FACT/ VALUE DICHOTOMY WVO Quine Ludwig Wittgenstein SCIENCE AND VALUE

Ernan McMullin writes: the maxim that scientific knowledge is value-laden seems almost entrenched as its opposite was earlier. The supposed wall between fact and value has been breached, and philosophers of science seem quite at home with the thought that science and values may be closely intertwined after all. Ernan McMullin, Values in Science in A Companion to Philosophy of Science, W.H. Newton Smith editor (Malden, MA: Blackwell, 2000), 550. SCIENCE AND VALUE

The scientific process requires that every scientist is fair, open-minded and objective. Good science requires that the scientific method be adhered to Thomas Kuhn explained normal science in his Structure of Scientific Revolutions, as the natural process of scientific change SCIENCE AND VALUE

Post-Normal Science is a concept developed by Silvio Funtowicz and Jerome Ravertz, It attempts to characterize a methodology of science that is appropriate for cases where "facts are uncertain, values in dispute, stakes high and decisions urgent It suggests that it is alright to drop the scientific method when it is important to ones agenda SCIENCE AND VALUE

Post-normal science is primarily applied in the context of long-term issues where there is less available information than is desired by stakeholders. For example: Global warming. It is not an ethical approach to science SCIENCE AND VALUE

Some scientific realists believe that if a scientific theory is true, it will also be beautiful or beautifully simple. Some realists assume that the true, the good and the beautiful are tied to metaphysics (metaphysical realism). Positivists argue that there is no connection between the true and beautiful PART 2 The Nature of Science

Types of Science Economics and Social Science TYPES OF SCIENCE August Comte was the first modern philosopher of science. He was the first to

distinguish the physical sciences from the social sciences. Comte believed that the physical sciences had to come before the "Queen science" of human society itself. Comtes concept of positivism is a rejection of theology and philosophy so that science can be effective. c al ( o

S r ci h e a n r c d e ) S ci e n c e

s TYPES OF SCIENCE HARD AND SOFT SCIENCE Hard science and soft science are colloquial terms often used when comparing scientific fields of academic study, with hard meaning perceived as being more scientific, rigorous, or accurate. Fields of the physical, and engineering sciences are often described as hard, while

the social sciences and similar fields are often described as soft. The hard sciences are characterized as relying on quantifiable empirical data, relying on the scientific method, and focusing on accuracy and objectivity. P B h io y lo si g c y al

TYPES OF SCIENCE M o r al P P ol hi iti lo c s s o p

h y FROM MORAL PHILOSOPHY TO SOCIAL SCIENCES SOCIAL SCIENCES Social sciences came forth from moral philosophy and was influenced by the industrial and French revolutions. The intent of the social sciences was to develop systematic knowledge-bases or prescriptive practices, relating to the social improvement of society.

The beginnings of the social sciences in the 18th century are influenced by the ideas of Diderot, Rousseau and other pioneers. TYPES OF SCIENCE A related aspect of the hard versus soft distinction has to do with the ease of drawing strong conclusions. In soft sciences, there are often numerous variables that might have an influence on some variable of interest, and many of those variables either may be nonquantifiable or may be quantifiable but difficult to obtain data on; but further, even with plentiful data, it may be difficult to disentangle the effects of such a large number of variables. In contrast, typically in the hard sciences there

are only a few, readily identified, causative variables, making it easier to infer specific causative effects. PART 3 The nature of Science Types of Science Economics and Social Science DEFINITION OF ECONOMICS

Economics is a social science that seeks to analyze and describe the production, distribution, and consumption of wealth. The word "economics" is from the Greek [oikos], "family, household, estate," and [nomos], "custom, law," and hence means "household management" or "management of the state. Economics can also be defined as "the study of how people seek to satisfy needs and wants" and "the study of the financial aspects of human behaviour." ECONOMIC SCIENCE

Economics is viewed as harder than many other social sciences because, while most of its data are empirically observed and not experimentally generated, there nevertheless is a large amount of available data to be analyzed statistically. The field of econometrics is the statistical analysis of economic data to determine whether one thing causes another or whether there is mere correlation between things. Economics is the social science that has applications to both politics and business

E c o n A o u NEO m st ic ri S a c n h o


Carl Menger was the founder of the Austrian School of Economics. They remained uninfluenced by positivism. They held to a more philosophical/ moral approach to economics. AUSTRIAN SCHOOL OF ECONOMICS

David Hilbert was a professor of mathematics at the University of Gottingen who influenced the Austrian School of Economics with formalism in the 1930s. His influence resulted in general equilibrium theory and game theory. AUSTRIAN SCHOOL OF

ECONOMICS John von Neumann was influenced by both Menger and Hilbert. He and Abraham Wald developed general equilibrium theory. He and Oskar Morgenstern developed game

theory AUSTRIAN SCHOOL OF ECONOMICS Abraham Wald was influenced by both Menger and Hilbert. He worked with John von Neumann to develop general equilibrium theory

He also helped to develop econometrics THE BRITISH SCHOOL OF ECONOMICS NeoClassical Economics THE BRITISH (CAMBRIDGE) SCHOOL OF ECONOMICS Alfred Marshall

was the founder of the Cambridge School of Economics. He required mathematics to study political economy THE BRITISH (CAMBRIDGE) SCHOOL OF ECONOMICS Willaim Stanley Jevons his book The Theory of Political Economy (1871)

as beginning the mathematical method in economics. It made the case that economics as a science concerned with quantities is necessarily mathematical. In so doing, it expounded upon the "final" (marginal) utility theory of value. THE BRITISH (CAMBRIDGE) SCHOOL OF ECONOMICS

Francis Ysidro Edgeworth Edgeworth was a highly influential figure in the development of neoclassical economics. He was the first to apply certain formal mathematical techniques to individual decision making in economics. He developed utility, introducing the indifference curve and the Edgeworth box. THE BRITISH (CAMBRIDGE) SCHOOL OF ECONOMICS

John Neville Keynes was a professor at Cambridge University. He followed positivist thinking and divided economics into positive, normative and applied branches. THE BRITISH (CAMBRIDGE) SCHOOL OF ECONOMICS

John Maynard Keynes is the eldest son of John Neville Keynes. Like his father , he was a professor at Cambridge University. He developed macroeconomics

THE LAUSAUNNE SCHOOL OF ECONOMICS NeoClassical Economics THE LAUSANNE SCHOOL OF ECONOMICS Leon Walras was the founder of the Laussane School of

Economics. He mathematized economics and developed general equilibrium theory THE LAUSANNE SCHOOL OF ECONOMICS Vito Volterra sought to mathmatize economics and biology by

replacing mathematical analogies with rigorous mathematical models. THE LAUSANNE SCHOOL OF ECONOMICS Vilfredo Pareto led the charge to

mathematize economics. He introduced the concept of Pareto Efficiency and helped develop the field of microeconomics. He also was the first to discover that income follows a Pareto distribution, which describes the allocation of wealth within a society. The Pareto Principle was named after him and built on observations of his such as that 80% of the land in Italy was owned by 20% of the population. He also contributed to the fields of sociology and mathematics.

CONTEMPORARY DEFINITION OF ECONOMICS The classic brief definition of economics, set out by Lionel Robbins in 1932, is "the science which studies human behavior as a relation between scarce means having alternative uses. CHICAGO SCHOOL OF

ECONOMICS Milton Friedman was a leader of the Chicago School of Economics. He emphasized a positivist and empiricist approach to economics. He believed that economics should be a science.

ECONOMIC IMPERIALISM Because economics is the hardest of the social sciences and the most influential, many of the other of the other social sciences are being influenced by economics. There is an ever growing use of statistical and mathematical techniques that came from economics in political science and sociology. SO IF ECONOMICS IS A SCIENCE, WHY IS THERE SO MUCH DISAGREEMENT?

Science cannot provide certainty There is not much disagreement in microeconomics The big disagreements are in macroeconomics There are disagreements in the approaches to econometric techniques

There are disagreements in forecasting techniques. There are MICROECONOMIC CIRCULAR FLOW MACROECONOMIC CONFUSION John Maynard Keynes Friedrich von Hayek MACROECONOMIC MODEL CONCLUSION

Economics comes from moral philosophy. Auguste Comtes positivism separated the different branches of moral philosophy from each other and turned them into the social sciences. Economics is a social science. Economics depends heavily upon mathematical models. Mathematics is what makes economics the

most difficult of the social sciences. There is still a moral dimension to economics.

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