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This is important but may be too wonkish for those who are not intimately familiar with econometrics. So let me try to simplify it and universalize it. The basic idea in logical reasoning is that an argument is sound if and only if the premises are true and the logical form is valid. Then the conclusion follows as necessarily true. This is the basis of scientific reasoning. In modeling, a set of assumptions, both substantive and procedural, is stipulated, that is, assumed to be true. In a well-founded model all the assumptions that make substantive claims are known to be true empirically on the basis of evidence. This is called semantic truth. The logical truth of logical form is formal proof. This is called syntactical truth. Only the former contains substance. The latter is
Topics:
Mike Norman considers the following as important: assumptions, econometrics, economic modeling, methodology, scientific method
This could be interesting, too:
This is important but may be too wonkish for those who are not intimately familiar with econometrics. So let me try to simplify it and universalize it. The basic idea in logical reasoning is that an argument is sound if and only if the premises are true and the logical form is valid. Then the conclusion follows as necessarily true. This is the basis of scientific reasoning. In modeling, a set of assumptions, both substantive and procedural, is stipulated, that is, assumed to be true. In a well-founded model all the assumptions that make substantive claims are known to be true empirically on the basis of evidence. This is called semantic truth. The logical truth of logical form is formal proof. This is called syntactical truth. Only the former contains substance. The latter is
Topics:
Mike Norman considers the following as important: assumptions, econometrics, economic modeling, methodology, scientific method
This could be interesting, too:
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The basic idea in logical reasoning is that an argument is sound if and only if the premises are true and the logical form is valid. Then the conclusion follows as necessarily true.
This is the basis of scientific reasoning.
In modeling, a set of assumptions, both substantive and procedural, is stipulated, that is, assumed to be true. In a well-founded model all the assumptions that make substantive claims are known to be true empirically on the basis of evidence. This is called semantic truth. The logical truth of logical form is formal proof. This is called syntactical truth. Only the former contains substance. The latter is purely procedural.
A key methodological assumption of the scientific method is naturalism. Being "scientific" signifies being based on observation, rather than say, intuition or "common sense," that is, self-evidence. No self-evident first principles — that's doing philosophy, not science. Not that such speculation is not useful. It's just not science and should not be conflated with science. There is often a tendency to do so.
This presents two major difficulties with scientific modeling versus philosophical speculation. The first is the empirical warrant of the starting points, the stipulations that are assumed to be true and serve as the premises of the argument. The second is knowing that all relevant information is included in the assumptions. This is called identification.
Paraphrasing Richard Feynman, we do science in order to avoid fooling ourselves and we are the easiest ones to fool (owing to confirmation bias, for example). This requires following scientific method scrupulously when substantial claims are made.
Keynes pointed out to Roy Harrod that econometrics did not conform to this strict procedure and that owing to the nature of the subject matter, economics was "moral science," which at the time signified what we would now call "philosophy." The social sciences and much of psychology fall into this category. They are basically speculative exercises that employ some formal methods that may be scientific, or not.
Accounting is a formal method that is proto-scientific in the sense that double entry it is made up of tautologies. But the entries can be checked for substance against journals and inventories. It is a method to prevent fooling ourselves on one hand, and to prevent cheating on the other.
When accounting tautologies (identities) are interpreted causally, then causal explanation demands empirical corroboration through data, e.g., measurable changes in stocks and flows.
Lars P. Syll’s Blog
Econometrics and the problem of unjustified assumptions
Lars P. Syll | Professor, Malmo University
See also
Bond Economics
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