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Bad faith economics

Summary:
Itzhak Gilboa, Andrew Postlewaite, Larry Samuelson and David Schmeidler (2022) describe a practice that … is not uncommon among theorists: “[O]ne may suggest a model with a descriptive interpretation in mind, but, when facing an aggressive audience, one might take a step back and rather than promoting the model as an explanation of a real-life phenomenon, present it as a ‘proof of concept’ or ‘merely an exercise’ in testing the scope of the standard paradigm. (p. 7)“ Think what is going on here. A theorist has created a model which he customarily presents as a proposed explanation of some empirical phenomenon. But now he is facing an audience that has sufficient knowledge of the evidence about this phenomenon, or of other related phenomena within the explanatory scope of

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Itzhak Gilboa, Andrew Postlewaite, Larry Samuelson and David Schmeidler (2022) describe a practice that … is not uncommon among theorists:

[O]ne may suggest a model with a descriptive interpretation in mind, but, when facing an aggressive audience, one might take a step back and rather than promoting the model as an explanation of a real-life phenomenon, present it as a ‘proof of concept’ or ‘merely an exercise’ in testing the scope of the standard paradigm. (p. 7)

WHAT IS BAD FAITH LITIGATION? | Edenfield, Cox & BruceThink what is going on here. A theorist has created a model which he customarily presents as a proposed explanation of some empirical phenomenon. But now he is facing an audience that has sufficient knowledge of the evidence about this phenomenon, or of other related phenomena within the explanatory scope of the model, to raise pertinent questions about the plausibility of that explanation … The theorist’s response is to make a temporary change in the way he ‘promotes’ his model … before reverting to the original one when facing less knowledgeable or less critical audiences. This surely amounts to acting in bad faith …

Suppose an experiment has been run and the opponent’s hypothesis has been rejected. Suppose the opponent then says: ‘I’m not at all surprised about your findings. When I proposed that mechanism as an explanation of your original observations, I knew it was implausible. My model was merely a theoretical exercise to show that your original observations were logically consistent with the standard theory. Now I’ll try to find an implausible explanation of your new results, and you can test that.’ This is not good science. If all that can be claimed for a model is that it is a theoretical exercise, empirical scientists should not be expected to treat its results as hypotheses that deserve to be tested.

Robert Sugden

Being able to model a ‘disciplined’ credible world, a world that somehow could be considered real or similar to the real world, is not the same as investigating the real world. Even though all theories are false, since they simplify, they may still possibly serve our pursuit of truth. But then they cannot be unrealistic or false in any way. The falsehood or unrealisticness has to be qualified (in terms of resemblance, relevance, etc.). At the very least, the minimalist demand on models in terms of credibility has to give way to a stronger epistemic demand of appropriate similarity and plausibility. One could of course also ask for a sensitivity or robustness analysis, but the credible world, even after having tested it for sensitivity and robustness, can still be a far way from reality – and unfortunately often in ways we know are important. The robustness of claims in a model does not per se give a warrant for exporting the claims to real-world target systems.

Even if epistemology is important and interesting in itself, it ought never to be anything but secondary in science. The primary questions asked have to be ontological. First after having asked questions about ontology can we start thinking about what and how we can know anything about the world. If we do that, I think it is more or less necessary also to be more critical of the reasoning by modelling that has come to be considered the only and right way to reason in mainstream economics for more than half a century now.

Bad faith economics If we can’t warrant that the premises (assumptions) on which our model conclusions are built are true, then what’s the value of the logically correct deductions we are supposed to make with our models? From false assumptions, anything logically follows!

Most mainstream economists, subscribe (although not often consciously or explicitly) to a deductive-nomological view on scientific explanation and prediction (an explanation of an event being nothing but a prediction of its occurrence), in which prediction and explanation are things to deduce from law-like hypotheses and a set of antecedent/initial conditions.  But — and on this, both Hempel and Popper were very explicit — to count as adequate/sound, the explanans must be true. Explanation and prediction in the models we construct and use is not only a question of logical form.  Models that intend to say something about the real world can’t escape dealing with ‘Truth’!

Model reasoning as an ‘object to enquire’ into activities, is not, from a scientific point of view, on a par with the much more important question if these models really have export-certificates to the real world or not. Just presenting logical possibilities in analytical modelling exercises has little or no scientific value at all.

Yours truly has for many years been urging economists to pay attention to the ontological foundations of their assumptions and models. Sad to say, economists have not paid much attention — and so modern economics has become increasingly irrelevant to the understanding of the real world.

I have spent a considerable part of my life building economic models, and examining the models that other economists have built. I believe that I am making reasonably good use of my talents in an attempt to understand the social world.

I have no fellow-feeling with those economic theorists who, off the record at seminars and conferences, admit that they are only playing a game with other theorists. If their models are not intended seriously, I want to say (and do say when I feel sufficiently combative), why do they expect me to spend my time listening to their expositions? Count me out of the game.

Robert Sugden

Lars Pålsson Syll
Professor at Malmö University. Primary research interest - the philosophy, history and methodology of economics.

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