Methodology of Economics (Lecture One) Flashcards
What are the main definitions of science discussed in the methodology of economics?
Definition/Explanation:
Science is defined as a systematic practice to understand phenomena by creating clear, testable, and falsifiable statements.
Key Characteristics:
* Demarcation Criteria: Statements must be logically analyzable and empirically verified.
* Science evolves through falsifiable predictions and refutations (Popper) or through paradigms (Kuhn).
* Different criteria for what counts as “science” impact economics as a discipline.
Thinkers/Theories:
* Popper: Focus on falsification over verification—scientific theories must be refutable.
* Kuhn: Emphasis on paradigms (shared assumptions and practices), which undergo revolutionary shifts.
* Lakatos: Science evolves through research programmes with a “hard core” and auxiliary hypotheses to guide exploration.
Critique/Impact:
While Popper’s approach emphasizes testability, Kuhn allows for periods of “normal science” where progress is incremental.
Lakatos bridges historical and normative perspectives, highlighting the adaptability of scientific theories.
Describe the Hypothetical-Deductive Method and its limitations.
Definition/Explanation:
* Start with a hypothesis → derive predictions → verify with observations.
* Example: “All swans are white” → observe swans to test this.
* Relies on induction, observation of individual cases (e.g., “all swans observed so far are white”) to create generalized laws.
* Problematic: not all possibilities can be observed, future observations can contradict previous ones (e.g., the discovery of black swans).
Context/Impact:
Economists use this method to develop models and predict outcomes.
* Standard approach in scientific methods, broadly used in early economic models.
Key Thinker
Popper: Challenges induction, arguing that science must focus on falsification.
Critiques:
* Symmetry Problem: Explanation ≠ prediction (correlation ≠ causation).
* Requires many observations under similar conditions but economics deals with complex, unpredictable systems
* Induction is limited—cannot verify all possibilities (e.g., black swan problem).
* This limitation prompts the use of falsifiability as a stronger criterion for scientific validity.
Compare Popper’s falsification criterion with the Hypothetical-Deductive Method.
Popper’s View:
Focus on falsification, not verification.
A hypothesis must be refutable to be scientific.
Example: “All swans are white” → falsify by finding one black swan.
Hypothetical-Deductive Method:
Relies on verifying predictions through observations.
Critique/Impact:
* Popper critiques induction; science must reject unrefutable claims.
* Example: Statements like “chocolate is good” aren’t falsifiable → unscientific.
What is Thomas Kuhn’s concept of paradigm shifts in science?
Definition/Explanation:
* Science progresses through stable paradigms punctuated by revolutionary shifts.
* Paradigms: Shared frameworks of methods, assumptions, and practices that guide scientific inquiry during periods of “normal science.”
* Paradigm Shifts: Revolutionary changes occur when existing paradigms fail to solve key problems, leading to the adoption of new paradigms
* Example: From Newtonian mechanics → Einstein’s relativity.
Thinkers/Theories:
* Kuhn’s structure: Pre-science → Normal science → Crisis → Revolution → New paradigm.
* Kuhn: Views science as a series of stable periods (normal science) punctuated by revolutions.
* Popper: Science evolves continuously through conjectures and refutations; no stable paradigms.
Critique/Impact:
* Economics often lacks a dominant paradigm, causing methodological pluralism.
* Criticized for being too relativistic—no normative rules for defining “better” paradigms.
What is Lakatos’ concept of a research programme, and how does it apply to economics?
Definition/Explanation:
Research programmes consist of:
* A hard core of unfalsifiable assumptions (e.g., rational agents in economics).
* A protective belt of auxiliary hypotheses to adapt and expand the programme.
* A programme is progressive if it solves new problems and generates novel predictions, and degenerative if it stagnates.
Thinkers/Theories:
- Lakatos: Blends Kuhn’s historical approach with Popper’s normative rules for evaluating science.
- Applications:
Post-Keynesian research programme focuses on economic dynamics, money, and competition, contrasting with neoclassical economics.
Critique/Impact:
* Strength: Explains how economic theories evolve over time and adapt to new challenges. Programmes are judged by their ability to solve problems (progressive vs. degenerative).
.
* Criticism: Hard to identify the “core” and distinguish progress from degeneration. Distinguishing between progressive and degenerative programmes is subjective, particularly in economics with its diverse schools of thought.
Explain the difference between verification and falsification, and why Popper considers falsification superior.
Definition/Explanation:
- Verification: A theory is scientific if observations confirm it.
- Falsification: A theory is scientific if it can be disproven by observation or experiment.
- Example: “All swans are white.” Verification looks for white swans, but falsification requires searching for a black swan.
Thinkers/Theories:
- Popper: Argues that falsifiability is the hallmark of science—verification cannot conclusively prove a theory true, but falsification can prove it false.
Critics:
* Duhem-Quine Thesis: A hypothesis cannot be tested in isolation; falsification often depends on auxiliary assumptions.
Critique/Impact:
- Falsification is widely accepted but is difficult in economics due to its reliance on models with many interdependent variables.
- Popper’s approach pushes economists to construct models that are testable, even if rarely falsified.
What are the limitations of Popper’s falsification criterion, and how does it apply to economics?
Definition/Explanation:
- Popper’s falsification: A theory must be refutable to be scientific.
- Example: “All swans are white” → Finding a black swan refutes this.
- Limitations arise when hypotheses cannot be tested in isolation or when falsification is impractical.
Key Thinkers:
- Popper: Advocated falsifiability but acknowledged challenges in complex sciences.
- Duhem-Quine Thesis: Testing any hypothesis involves auxiliary assumptions.
Example: If a rocket fails, was the hypothesis wrong or the equipment faulty?
Falsification may reflect issues in the test setup, not the hypothesis.
Critique/Impact:
- In economics, theories shielded by auxiliary assumptions (e.g., rational agents, ceteris paribus conditions)→ Falsification challenging.
Example: Testing Keynesian models depends on assumptions about consumer behavior and policy constraints. - Counter, falsification pushes economics toward empirical rigor and emphasizes testable predictions.
Describe the Duhem-Quine thesis and its implications for falsificationism.
Definition/Explanation:
- Duhem-Quine Thesis: A hypothesis cannot be tested in isolation; testing depends on background assumptions.
Example: A failed weather prediction might mean the hypothesis is wrong, or it might reflect flaws in data collection or modeling tools. - Implication: Scientific tests involve many assumptions, difficult to pinpoint what is falsified.
Key Thinkers:
- Pierre Duhem: Highlighted the interdependence of hypotheses in physical sciences.
- Willard Quine: Extended this idea to all scientific fields, emphasizing the holistic nature of testing.
- Critique of Popper: Falsification not always straightforward, rejecting a hypothesis could mean rejecting auxiliary assumptions instead.
Critique/Impact:
- In economics, models rely on numerous assumptions (e.g., rational behavior, perfect competition). If a prediction fails, unclear which assumption flawed.
- Encourages economists to carefully evaluate underlying assumptions and auxiliary hypotheses when testing models.
- Highlights the importance ofrobustness testing and sensitivity analysis in economic research.
What are the main differences between Kuhn’s paradigms and Lakatos’ research programmes?
Definition/Explanation:
- Kuhn’s Paradigms:
Science progresses through paradigms (shared assumptions and practices) that undergo revolutionary shifts when anomalies accumulate.
Example: Shift from Newtonian physics to Einsteinian relativity. (classical mechanics → relativity) - Lakatos’ Research Programmes:
Science advances through competing research programmes, each with: - A hard core of unfalsifiable assumptions (e.g., rationality in economics).
- A protective belt of testable auxiliary hypotheses.
- Progress is judged by a programme’s ability to solve new problems. (normative rules for evaluating “progressiveness”)
Key Thinkers:
- Kuhn: Emphasized historical revolutions and paradigm incommensurability.
- Lakatos: Blended historical analysis with normative criteria for evaluating progress.
Critique/Impact:
- Kuhn’s model explains why economics lacks a single dominant paradigm, making it more pluralistic.
- Lakatos provides a more flexible framework, accommodating gradual evolution alongside revolutionary shifts.
- Criticism: Kuhn’s relativism undermines objective progress; Lakatos’ criteria for “progressive” vs. “degenerative” programmes can be subjective in economics.
Discuss the role of ad hoc hypotheses in science according to Popper and Lakatos.
Definition/Explanation:
- Ad hoc hypotheses: Additional assumptions introduced to protect a theory from falsification without increasing its explanatory or predictive power.
- Popper: Criticized ad hoc hypotheses as unscientific since they shield theories from falsification without providing new testable predictions.
Example: Adding “invisible factors” to explain anomalies in data without empirical support. - Lakatos: Differentiated between “ad hoc” and auxiliary hypotheses in research programmes.
Auxiliary hypotheses are part of the “protective belt” and can be adjusted to defend the “hard core” while allowing progress.
Key Thinkers:
- Popper: Ad hoc adjustments undermine scientific process by avoiding falsification.
- Lakatos: A well-constructed research programme uses auxiliary hypotheses to adapt and evolve, but excessive reliance signals degenerative programme.
Critique/Impact:
- Economics frequently uses auxiliary hypotheses to refine models (e.g., adjusting rational expectations theory).
- Popper’s stricter stance calls for rejecting theories instead of defending them with ad hoc assumptions, while Lakatos allows flexibility for scientific progress.
What is Kuhn’s view on scientific revolutions, and how does it differ from Popper’s falsificationist model?
Definition/Explanation:
- Kuhn’s Paradigm Shifts:
Science progresses through stable paradigms (shared methods and assumptions). - Revolutions occur when anomalies accumulate, leading to a paradigm shift.
Example: From Newtonian mechanics to Einstein’s relativity. - Popper’s Falsification:
Continuous rejection of falsified theories; no concept of stable paradigms.
Progress is linear through conjectures and refutations.
Key Thinkers:
- Kuhn: Focused on historical case studies of scientific change.
- Popper: Advocated for testable, falsifiable theories, rejecting paradigms.
Critique/Impact:
- Kuhn’s relativism suggests paradigms are incommensurable, creating challenges for economics, where paradigms (e.g., Keynesian vs. Neoclassical) coexist.
- Popper’s model is more prescriptive but struggles to account for periods of “normal science.”
What does Lakatos mean by progressive and degenerative research programmes? Provide examples from economics.
Definition/Explanation:
- Progressive Programmes:
Generate new predictions and solve emerging problems.
Example: Post-Keynesian economics adapts to modern financial crises by integrating instability and money supply. - Degenerative Programmes:
Rely on ad hoc adjustments without solving new problems.
Example: Stagnation in certain neoclassical models when faced with real-world deviations (e.g., 2008 financial crisis).
Key Thinkers:
- Lakatos: Emphasized evaluating programmes based on their problem-solving and predictive power.
Critique/Impact:
Economics showcases both types:
* Progressive: Behavioral economics integrates psychology to address anomalies in rational agent models.
* Degenerative: Over-reliance on equilibrium models in unrealistic conditions undermines predictive power.
Discuss the role of the protective belt in Lakatos’ research programmes. How does it allow for scientific progress?
Definition/Explanation:
- Protective Belt: A set of auxiliary hypotheses that can be adjusted to defend the core assumptions.
- Allows adaptation without abandoning the “hard core.”
Example: Adjusting assumptions about market efficiency in light of behavioral economics findings.
Key Thinkers:
Lakatos: Protective belts are essential for the flexibility and adaptability of research programmes.
Critique/Impact:
- Strength: Enables progress without discarding the entire framework.
- Weakness: Over-reliance can lead to degenerative research.
What are the limitations of Kuhn’s paradigm shift theory, and how does it apply to the history of economics?
Definition/Explanation:
Limitations:
* Paradigms are incommensurable—hard to compare and judge which is better.
* Lacks normative criteria for evaluating progress.
* Application to Economics:
Economics has multiple competing paradigms (e.g., Keynesian, Neoclassical), complicating Kuhn’s model.
Critique/Impact:
* Criticized for relativism and the absence of evaluative standards.
* Explains pluralism in economics but struggles to guide decisions about which paradigm to adopt.
What are the demarcation criteria for science according to Popper, Kuhn, and Lakatos? How do these criteria apply to economics?
Definition/Explanation:
- Popper: Falsifiability as the key criterion.
- Kuhn: Adherence to paradigms during normal science.
- Lakatos: Progressiveness in solving new problems.
Key Thinkers:
- Popper: Clear demarcation through falsification.
- Kuhn: Focus on historical and sociological aspects.
- Lakatos: Balances empirical and theoretical progress.
Critique/Impact: - Economics often falls short of these criteria, leading to debates about its scientific status.
