Lars P. Syll

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How do we know which explanation is the best?  [embedded content] If only mainstream economists also understood these basics … But they don’t! Why? Because in mainstream economics it’s not inference to the best explanation that rules the methodological-inferential roost, but deductive reasoning based on logical inference from a set of axioms. Although — under specific and restrictive assumptions — deductive methods may be usable tools, insisting that economic theories and models ultimately...

Robert Lucas — an economist pretending to know We are storytellers, operating much of the time in worlds of make believe. We do not find that the realm of imagination and ideas is an alternative to, or retreat from, practical reality. On the contrary, it is the only way we have found to think seriously about reality. In a way, there is nothing more to this method than maintaining the conviction … that imagination and ideas matter … there is no practical alternative” Robert Lucas...

Inference to the Best Explanation  [embedded content] In a time when scientific relativism is expanding, it is important to keep up the claim for not reducing science to a pure discursive level. We have to maintain the Enlightenment tradition of thinking of reality as principally independent of our views of it and of the main task of science as studying the structure of this reality. Perhaps the most important contribution a researcher can make is reveal what this reality that is the object...

Rules of inference — the vain search for the Holy Grail Traditionally, philosophers have focused mostly on the logical template of inference. The paradigm-case has been deductive inference, which is topic-neutral and context-insensitive. The study of deductive rules has engendered the search for the Holy Grail: syntactic and topic-neutral accounts of all prima facie reasonable inferential rules. The search has hoped to find rules that are transparent and algorithmic, and whose following...

Phelps’ smackdown on Lucas’ rational expectations The tiny little problem that there is no hard empirical evidence that verifies rational expectations models doesn’t usually bother its protagonists too much. Rational expectations überpriest Thomas Sargent has defended the epistemological status of the rational expectations hypothesis arguing that since it “focuses on outcomes and does not pretend to have behavioral content,” it has proved to be “a powerful tool for making precise...

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Never seek to tell thy love (private)  [embedded content]

Bayesian rationality — a version of probabilistic irrationalism (wonkish) The initial choice of a prior probability distribution is not regulated in any way. The probabilities, called subjective or personal probabilities, reflect personal degrees of belief. From a Bayesian philosopher’s point of view, any prior distribution is as good as any other. Of course, from a Bayesian decision maker’s point of view, his own beliefs, as expressed in his prior distribution, may be better than any...

Neoclassical economics — purchasing validity at the cost of empirical content The fact that the economics profession was caught unawares in the long build- up to the 2007 worldwide financial crisis and substantially underestimated its dimensions once it started to unfold can be attributed to two factors … first, the lack of an empirical motivation in the essential modelling assumptions, combined with questionable ceteris paribus assumptions; and second, a blatant disregard for the complete...