Economic methodology

For other methodological approaches, see Heterodox economics.

Economics
World GDP (PPP) per capita by country (2014)
Index Outline Category
History Types Classification
History of economics Economic history (academic study) Schools of economics Microeconomics Macroeconomics Heterodox economics Methodology JEL classification codes
Concepts Theory Techniques
Econometrics Economic growth Economic system Experimental economics Mathematical economics Game theory Market National accounting
By application
Agricultural Behavioral Business Computational Cultural Demographic Development Digitization Ecological Education Environmental Evolutionary Expeditionary Geography Health Industrial organization Information International Labour Law Managerial Monetary / Financial Natural resource Personnel Public / Welfare economics Regional Rural Urban Welfare
Lists
Economists Publications (journals)
Business and economics portal

Economic methodology is the study of methods, especially the scientific method, in relation to economics, including principles underlying economic reasoning.^[1] In contemporary English, 'methodology' may reference theoretical or systematic aspects of a method (or several methods). Philosophy and economics also takes up methodology at the intersection of the two subjects.

Scope

General methodological issues include similarities and contrasts to the natural sciences and to other social sciences and, in particular, to:

the definition of economics^[2]
the scope of economics as defined by its methods^[3]
fundamental principles and operational significance of economic theory^[4]
methodological individualism versus holism in economics^[5]
the role of simplifying assumptions such as rational choice and profit maximizing in explaining or predicting phenomena^[6]
descriptive/positive, prescriptive/normative, and applied^[7] uses of theory^[8]
the scientific status^[9] and expanding domain of economics^[10]
issues critical to the practice and progress of econometrics^[11]
the balance of empirical and philosophical approaches^[12]
the role of experiments in economics^[13]
the role of mathematics and mathematical economics in economics^[14]
the writing^[15] and rhetoric of economics^[16]
the relation between theory, observation, application, and methodology in contemporary economics.^[17]

Economic methodology has gone from periodic reflections of economists on method to a distinct research field in economics since the 1970s. In one direction, it has expanded to the boundaries of philosophy, including the relation of economics to the philosophy of science, the theory of knowledge^[18] In another direction of philosophy and economics, additional subjects are treated include decision theory and ethics.^[19]

Notes

↑
Press + button to enlarge small-text links below.
   • Roger E. Backhouse, 2008. "methodology of economics", The New Palgrave Dictionary of Economics, 2nd Edition. Abstract.
   • Lawrence A. Boland, 1987. "methodology", The New Palgrave: A Dictionary of Economics, v. 3, pp. 455-56.
   • Daniel M. Hausman, 1989. "Economic Methodology in a Nutshell", Journal of Economic Perspectives, 3(2), pp. 115-127.
   • Kevin D. Hoover, 1995. "Review Article: Why Does Methodology Matter for Economics?" Economic Journal, 105(430), pp. 715-734.
↑ • John Stuart Mill, 1844. "On the Definition of Political Economy; and on the Method of Investigation Proper to It", Essay V, in Essays on Some Unsettled Questions of Political Economy.
• Roger E. Backhouse and Steven Medema, 2008. "economics, definition of", The New Palgrave Dictionary of Economics, 2nd Edition. Abstract.
• _____. 2009. "Retrospectives: On the Definition of Economics", Journal of Economic Perspectives, 23(1), pp. 221–33 (close Bookmarks tab) Abstract.
↑ John Neville Keynes, 1891. The Scope and Method of Political Economy. Annotated chapter links. 4th ed., 1917 [1999]. Full Contents.
↑ • John R. Hicks, 1939. Value and Capital: An Inquiry into Some Fundamental Principles of Economic Theory.
   • Terence W. Hutchison, 1938. The Significance and Basic Postulates of Economic Theory.
  • Martin Hollis and Edward J. Nell, 1975. Rational Economic Man, ch. 3,4,5 and 7. Cambridge University Press.
  • Paul A. Samuelson, 1947. Foundations of Economic Analysis.
   • Richard G. Lipsey, 2008. "positive economics." The New Palgrave Dictionary of Economics. 2nd Edition. Abstract.
   • Lawrence A. Boland, 2008. "instrumentalism and operationalism", The New Palgrave Dictionary of Economics, 2nd Edition. Abstract.
   • _____, 2003. The Foundations of Economic Method, 2nd Edition. Description and chapter links.
↑ • Kaushik Basu, 2008. "methodological individualism", The New Palgrave Dictionary of Economics, 2nd Edition. Abstract.
  • Edward J. Nell, 1998. General Theory of Transformational Growth, Part I. Cambridge University Press.
   • Harold Kincaid, 2008. "individualism versus holism", The New Palgrave Dictionary of Economics, 2nd Edition. Abstract.
   • F.A. Hayek, 1948. Individualism and Economic Order. Chapter-preview links.
   • George J. Stigler and Paul A. Samuelson, 1963. "A Dialogue on the Proper Economic Role of the State." Selected Papers, No. 7. University of Chicago Graduate School of Business.
   • James M. Buchanan, 1990. "The Domain of Constitutional Economics", Constitutional Political Economy, 1(1), pp. 1-18, adapted as "Constitutional Political Economy" in C. K. Rowley and F. Schneider, ed., 2004, The Encyclopedia of Public Choice, v. 2, pp. 60-67.
   • Kenneth J. Arrow, 1994. "Methodological Individualism and Social Knowledge", American Economic Review, 84(2), pp. 1-9.
   • Richard H. Thaler and Cass R. Sunstein, 2008. Nudge: Improving Decisions about Health, Wealth, and Happiness. Yale. Description and preview.
   • Shiozawa, Y. 2004 Evolutinary Economics in the 21st Century: A Manifest, Evolutionary and Institutional Economics Review, 1(1): 5-47.
↑ • Lawrence A. Boland, 2008. "assumptions controversy", The New Palgrave Dictionary of Economics, 2nd Edition. Abstract.
   • Milton Friedman, 1953. "The Methodology of Positive Economics" in Essays in Positive Economics.
   • Paul A. Samuelson, 1963. "Problems of Methodology: Discussion", American Economic Review, 53(2) American Economic Review, pp. 231-236. Reprinted in J.C. Wood & R.N. Woods, ed., 1990, Milton Friedman: Critical Assessments, v. I, pp. 107-13. Preview. Routledge.
   • Stanley Wong, 1973. "The 'F-Twist' and the Methodology of Paul Samuelson", American Economic Review, 63(3) p p. 312-325. Reprinted in J.C. Wood & R.N. Woods, ed., Milton Friedman: Critical Assessments, v. II, pp. 224-43.
   • Shaun Hargreaves Heap, 2008. "economic man", The New Palgrave Dictionary of Economics, 2nd Edition. Abstract.
   • Kenneth J. Arrow, [1987] 1989. "Economic theory and the hypothesis of rationality", in The New Palgrave: Utility and Probability, pp. 25-39.
   • Duncan K. Foley, 2004. "Rationality and Ideology in Economics", Social Research, pp. 329-342. Pre-publication version.
   • Thomas J. Sargent, 1994. Bounded Rationality in Macroeconomics, Oxford. Description and chapter-preview 1st-page links.
   • Vernon L. Smith, 2008. Rationality in Economics: Constructivist and Ecological Forms, Cambridge. Description/contents links and preview.
↑ • David Colander (1992). "Retrospectives: The Lost Art of Economics", Journal of Economic Perspectives, 6(3), pp. 191-198.
• John Neville Keynes, 1891. The Scope and Method of Political Economy. ch. I-II. Annotated chapter links. 4th ed., 1917 [1999]. Full Contents.
↑ • Richard G. Lipsey, 2008. "positive economics." The New Palgrave Dictionary of Economics. 2nd Edition. Abstract.
   • Amartya Sen, 1980. "Description as Choice", Oxford Economic Papers, N.S., 32(3), pp. 353-369. Reprinted in Sen, 1982, Choice, Welfare and Measurement, Oxford, Basil Blackwell. Chapter-preview link, p. 432-449.
   • John Neville Keynes, 1891. The Scope and Method of Political Economy. ch. I, III. Annotated chapter links. 4th ed., 1917 [1999]. Full Contents.
   • Colin F. Camerer, 2003. Behavioral Game Theory: Experiments in Strategic Interaction, pp. 5-7 (scroll to at 1.1 What Is Game Theory Good For?).
   • Kenneth E. Boulding, 1969. "Economics as a Moral Science", American Economic Review, 59(1), pp. 1–12.
   • A. B. Atkinson, 2009. "Economics as a Moral Science", Economica, 76(1), pp. 791–804.
   • "Economics as a Moral Science" session, 2011. American Economic Review, 101(3), article-abstract links.
↑ • Lionel Robbins, 1932. An Essay on the Nature and Significance of Economic Science.
   • Richard G. Lipsey, 2009. "Some Legacies of Robbins’ An Essay on the Nature and Significance of Economic Science", Economica, 76(302), pp. 845-56 (press + button).
   • Alexander Rosenberg (1983). "If Economics Isn't Science, What Is It?" Philosophical Forum, 14, pp. 296-314. Reprinted in M. Martin and L. C. McIntyre (1996), Readings in the Philosophy of Social Science, pp. 661-674.
   • Douglas W. Hands, 1984. "What Economics Is Not: An Economist's Response to Rosenberg", Philosophy of Science, 51(3), p p. 495-503.
   • Daniel M. Hausman, 1992. The Inexact and Separate Science of Economics. Description, to ch. 1 link, preview, and reviews, 1st pages: .
↑ • Edward P. Lazear, 2000. "Economic Imperialism", Quarterly Journal of Economics, 115(1), pp. 99-146.
   • George J. Stigler, 1984. "Economics—The Imperial Science?" Scandinavian Journal of Economics, 86(3), p p. 301-313.
   • Ben Fine, 2000. " Economics Imperialism and Intellectual Progress: The Present as History of Economic Thought?" History of Economics Review, 32, pp. 10-36.
   • Jack Hirshleifer, 1985. "The Expanding Domain of Economics", American Economic Review, 75(6), pp. 53-68 (press +). Reprinted in Jack Hirshleifer, 2001, The Dark Side of the Force: Economic Foundations of Conflict Theory, ch.14, pp. 306- 42.
   • Gary S. Becker, 1976. The Economic Approach to Human Behavior. Description and preview.
   • _____, 1992. "The Economic Way of Looking at Life." Nobel Lecture link, also in 1993, Journal of Political Economy, 101(3), pp. 383-409.
↑ • Kevin D. Hoover, 2008. "causality in economics and econometrics", The New Palgrave Dictionary of Economics, 2nd Edition. Abstract and galley proof.
   • H. Wold 1954. "Causality and Econometrics", Econometrica, 22(2), p p. 162-177.
   • C. W. J. Granger and P. Newbold, 1974. "Spurious Regressions in Econometrics", Journal of Econometrics, 2(2), pp. 111-120.
   • David F. Hendry, 1980. "Econometrics — Alchemy or Science?" Economica, N.S., 47(188), pp. 387-406.
   • _____ 2001a. "Achievements and Challenges in Econometric Methodology", Journal of Econometrics, 100(1), pp. 7-10. PDF, pp. 1-4.
   • _____, 2001b. Econometrics: Alchemy or Science Essays in Econometric Methodology, 2nd Edition. Oxford. Description and contents. Review in the Economic Journal.
   • Edward E. Leamer, 1983. "Let's Take the Con Out of Econometrics", American Economic Review, 73(1), pp. 31-43.
   • Christopher A. Sims, 1980. "Macroeconomics and Reality", Econometrica,48, No. 1, pp. 1-48.
   • Fischer Black, 1982. "The Trouble with Econometric Models", Financial Analysts Journal, 38(2), pp. 29-37. Reprinted in Black, 2009, Business Cycles and Equilibrium, Wiley. Updated version, pp. 135 - 150.
   • From Truman F. Bewley, ed., 1987. Advances in Econometrics: Fifth World Congress, Cambridge v. 2:
         Edward E. Leamer, "Econometric Metaphors", pp. 1- 28.
         David F. Hendry. "Econometric Methodology: A Personal Perspective", pp. 29- 42.
   • P.C.B. Phillips, 1988. "Reflections on Econometric Methodology", Economic Record, 64(4), pp. 344–359. Abstract.
   • David F. Hendry, Edward E. Leamer, and Dale J. Poirier, 1990. "The ET Dialogue: A Conversation on Econometric Methodology", Econometric Theory, 6(2), pp. 171-261.
   • Deirdre N. McCloskey and Stephen T. Ziliak, 1996. "The Standard Error of Regressions", Journal of Economic Literature, 34(1), pp. 97–114.
   • Kevin D. Hoover and Mark V. Siegler, 2008. "Sound and Fury: McCloskey and Significance Testing in Economics", Journal of Economic Methodology, 15(1), pp. 1–37; McCloskey and Ziliak, "Signifying Nothing: Reply to ..." [preprint] and Hoover and Siegler, "... Rejoinder to ..., pp. 39–68;
   • Edward J. Nell and Karim Errouaki, 2011. Rational Econometric Man,Part I and ch. 10. Edward Elgar.
↑ • Mark Blaug, 2007. "The Social Sciences: Economics", Postwar developments, Methodological considerations in contemporary economics, The New Encyclopædia Britannica, v. 27, pp. 346-47.
   • Edward J. Nell (2004) "Critical Realism and Transformational Growth." In Transforming Economics. Edited by P. Lewis. London: Routledge.76-95.
   • Frank H. Knight, 1924. "The Limitations of Scientific Method in Economics", in The Trend of Economics, R.G. Tugwell, ed., pp. 229-67. Reprinted in Frank H. Knight, 1935 [1997], The Ethics of Competition, pp. 97- 139.
   •Daniel M. Hausman, 1983. "The Limits of Economic Science", in The Limits of Lawfulness: Studies on the Scope and Nature of Scientific Knowledge, N. Rescher, ed. Reprinted in D.M. Hausman, 1992, Essays on Philosophy and Economic Methodology, pp. 99-108.
   • Ludwig von Mises, 1949. Human Action.
   • Bruce Caldwell, [1987] 2008. "positivism", The New Palgrave Dictionary of Economics, 2nd Edition. Abstract.
↑ • C.F. Bastable, [1925] 1987. "experimental methods in economics", i, The New Palgrave: A Dictionary of Economics, v. 2, p. 241.
   • Vernon L. Smith, [1987] 2008a. "experimental methods in economics", The New Palgrave Dictionary of Economics, 2nd Edition. Abstract.
   • _____, 2008b. "experimental economics", The New Palgrave Dictionary of Economics, 2nd Edition, Abstract.
   • Herman O. Wold (1969). "Econometrics as Pioneering in Nonexperimental Model Building", Econometrica, 37(3), p p. 369-381.
↑ • W. Stanley Jevons, 1879. The Theory of Political Economy, 2nd ed., ch. I, "Introduction", pp. 1-29.
   • Paul A. Samuelson, 1952. "Economic Theory and Mathematics — An Appraisal", American Economic Review, 42(2), pp. 56-66.
   • D.W. Bushaw and R.W. Clower, 1957. Introduction to Mathematical Economics, pp. vii-viii and ch. 1, pp. 3-8.
   • Gérard Debreu, ([1987] 2008). "mathematical economics", The New Palgrave Dictionary of Economics, 2nd Edition. Abstract. (First published with revisions from 1986, "Theoretic Models: Mathematical Form and Economic Content", Econometrica, 54(6), pp. 1259-1270.)
   • _____ 1991. "The Mathematization of Economic Theory", American Economic Review, 81(1), pp. 1-7.
   • Robert W. Clower, 1994. "Economics as an Inductive Science", Southern Economic Journal, 60(4), pp. 805-814.
   • _____, 1995. "Axiomatics in Economics", Southern Economic Journal, 62(2), pp. 307-319.
   • Mark Blaug, 2003. "The Formalist Revolution of the 1950s", Journal of the History of Economic Thought, 25(2), pp. 145-156. Abstract. Reprinted in Warren J. Samuels, et al., ed., 2003, A Companion to the History of Economic Thought, Wiley, pp. 395- 409.
   • _____, 1998. "Disturbing Currents in Modern Economics", Challenge, 41(3), pp. 11-34. Reprint.
   • Paul Krugman, 1998, "Two Cheers for Formalism", Economic Journal, 108(451), pp. 1829-1836.
   • Terence Hutchison, 2000. On the Methodology of Economics and the Formalist Revolution, Edward Elgar. Description and preview.
   • E. Roy Weintraub, 2008. "mathematics and economics", The New Palgrave Dictionary of Economics, 2nd Edition. Abstract.
   • _____, 2002. How Economics Became a Mathematical Science, Duke University Press. Description, preview, and review extract.
   • Kenneth J. Arrow, 1951. Social Choice and Individual Values.
   • Amartya K. Sen, 1970 [1984]. Collective Choice and Social Welfare ISBN 0-444-85127-5.
   • _____, 2008. "social choice", The New Palgrave Dictionary of Economics, 2nd Edition. Abstract.
↑ • William Thomson, 1999. "The Young Person's Guide to Writing Economic Theory," Journal of Economic Literature, 37(1), pp. 157-183.
   • _____, 2001. A Guide for the Young Economist: Writing and Speaking Effectively about Economics. Chapter-preview links.
   • Eric Rasmusen, 2001. "Aphorisms on Writing, Speaking, and Listening", in E. Rasmusen, ed., Readings in Games and Information, pp. 389-420. PDF.
   • Donald McCloskey, 1985. "Economical Writing", Economic Inquiry, 23(2), pp. 187-222.
   • David N. Laband and Christopher N. Taylor, 1992. "The Impact of Bad Writing in Economics", Economic Inquiry, 30(4), pp. 673-688.
↑ • D.N. McCloskey, 1983. "The Rhetoric of Economics", Journal of Economic Literature, 21(2), pp. 481-517.
   • _____, [1985] 1998, 2nd ed. The Rhetoric of Economics. Chapter-preview links.
   • Roger Backhouse, T. Dudley-Evans, and Willie Henderson, 1993. "Exploring the Language and Rhetoric of Economics", in Willie Henderson et al., Economics and Language, pp. 1-20 (preview)
   • John Kenneth Galbraith, 1962. "The Language of Economics", Fortune, LXVI(6), Dec. pp. 12-30, 169, 31. Excerpt at [CNN] "FORTUNE: John Kenneth Galbraith, excerpts from his writing", May 17, 2006.
↑ • Wassily Leontief, 1971. "Theoretical Assumptions and Nonobserved Facts", American Economic Review, 61(1), pp. 1-7. Reprinted in W. Leontief, 1977, Essays in Economics, v. 1, ch. III, pp. 24-34.
   • Mark Blaug, 1992. The Methodology of Economics: Or How Economists Explain, 2nd ed., Cambridge. Description and Preview.
   • Roger Backhouse and Mark Blaug, 1994. New Directions in Economic Methodology, Routledge. Contents preview.
   • P.A.G. van Bergeijk et al., 1997. Economic Science and Practice: The Roles of Academic Economists and Policy-Makers. Description & preview links.
   • D. Wade Hands, 2001. Without Rules: Economic Methodology and Contemporary Science Theory, Oxford. Description and contents preview.
   • Christopher A. Sims, 1996. "Macroeconomics and Methodology", Journal of Economic Perspectives, 10(1), pp. 105-120.
   • Kevin D. Hoover, 2001. The Methodology of Empirical Macroeconomics, Oxford. Description and preview.
   • Bruno S. Frey, 2001. "Why Economists Disregard Economic Methodology, Journal of Economic Methodology, 8(1), pp. 41–47.
↑ Lawrence A. Boland, 2006. "Seven Decades of Economic Methodology: A Popperian Perspective", in Karl Popper: A Centenary Assessment, v. 3, ed. Ian Charles Jarvie et al., pp. 219
↑ • _____, [1994] 2006, Economic Analysis and Moral Philosophy, 2nd ed. New York, Cambridge University Press. ISBN 0521558506

References

John Bryan Davis, D. Wade Hands, Uskali Mäki (1998). Handbook of Economic Methodology, E. Elgar
Hands, D. Wade, ed. (1993). The Philosophy And Methodology Of Economics, Duke University
Hausman, Daniel M. (1984). The Philosophy of Economics: An Anthology. New York: Cambridge University Press, ISBN 052145929X
Boland, L. (1982) The Foundations of Economic Method, London: Geo. Allen & Unwin.
Boland, L. (1989) The Methodology of Economic Model Building: Methodology after Samuelson, London: Routledge.
Boland, L. (1997) Critical Economic Methodology: A Personal Odyssey, London: Routledge
Boland, L. (2003) The Foundations of Economic Method: A Popperian Perspective, London: Routledge
D.N. McCloskey (1983). The Rhetoric of Economics, Univ of Wisconsin Press, 1998
Daniel M. Hausman (1992). Essays on Philosophy and Economic Methodology, Cambridge University Press, 1992
Nell, E.J. and Errouaki, K. (2011) Rational Econometric Man. Edward Elgar.
Düppe, T. (2011). How Economic Methodology Became a Separate Science, Journal of Economic Methodology, 18 (2): 163-176.

External links

Journal of Economic Methodology - page @ EconPapers
Daniel M. Hausman, Philosophy of Economics (with focus on methodology), Stanford Encyclopedia of Philosophy
Milton Friedman, "The Methodology of Positive Economics"

Economics

Divisions	Economic theory Econometrics Applied economics

Macroeconomics	Adaptive expectations Aggregate demand Balance of payments Business cycle Capacity utilization Capital flight Central bank Consumer confidence Currency Demand shock DSGE Economic growth Economic indicator Economic rent Effective demand General Theory of Keynes Great Depression Hyperinflation Inflation Interest Interest rate Investment IS–LM model Microfoundations Monetary policy Money NAIRU National accounts PPP Rate of profit Rational expectations Recession Saving Stagflation Supply shock Unemployment Macroeconomics publications

Microeconomics	Aggregation problem Budget set Consumer choice Convexity Cost–benefit analysis Deadweight loss Distribution Duopoly Economic equilibrium Economic shortage Economic surplus Economies of scale Economies of scope Elasticity Expected utility hypothesis Externality General equilibrium theory Indifference curve Intertemporal choice Marginal cost Market failure Market structure Monopoly Monopsony Non-convexity Oligopoly Opportunity cost Preference Production set Profit Public good Returns to scale Risk aversion Scarcity Shrinkflation Social choice theory Sunk costs Supply and demand Theory of the firm Trade Uncertainty Utility Microeconomics publications

Applied fields	Agricultural Business Demographic Development Economic history Education Environmental Financial Health Industrial organization International Labour Law and economics Monetary Natural resource Public Urban Welfare

Methodology	Behavioral economics Computational economics Econometrics Economic systems Experimental economics Mathematical economics Methodological publications

Economic thought	Ancient economic thought Austrian School Chicago school of economics Classical economics Feminist economics Green economics Heterodox economics Institutional economics Keynesian economics Mainstream economics Marxian economics Neoclassical economics Post-Keynesian economics Schools overview

Notable economists and thinkers within economics	Kenneth Arrow Gary Becker Francis Ysidro Edgeworth Milton Friedman Ragnar Frisch Friedrich Hayek Harold Hotelling John Maynard Keynes Tjalling Koopmans Paul Krugman Robert Lucas, Jr. Jacob Marschak Alfred Marshall Karl Marx John von Neumann Vilfredo Pareto David Ricardo Paul Samuelson Joseph Schumpeter Amartya Sen Herbert A. Simon Adam Smith Robert Solow Léon Walras more

International organizations	Asia-Pacific Economic Cooperation Economic Cooperation Organization European Free Trade Association International Monetary Fund Organisation for Economic Co-operation and Development World Bank World Trade Organization

Category Index Lists Outline Publications Business and economics portal

This article is issued from Wikipedia - version of the Sunday, February 14, 2016. The text is available under the Creative Commons Attribution/Share Alike but additional terms may apply for the media files.

Economic methodology

Scope

See also

Notes

References

External links