Tag Archives: assumptions

Book review.American Affairs REVIEW ESSAY–The Reformation in Economics: A Deconstruction and Reconstruction of Economic Theory by Philip Pilkington Marc Morgan | research economist at the World Inequality Lab of the Paris School of Economics.

The problem with economics as a discipline, and this generally includes all forms of economics including heterodox economics to some extent, is "economics." That is is to say, economists assume that economics is chiefly or exclusively about economic behavior when economic behavior is embedded in social and political behavior and includes the entire "human condition." The only "economist" that really grasped this in depth was Karl Marx, and he was a philosopher coming from a Hegelian...

I would add philosophical, social, and scientific to economic assumption. For example, academic economics focuses on homo economicus, ignoring that there is no clearcut, hard and fast distinction among the aspects of life that the various disciplines study. In previous times, when knowledge as a whole was more tractable, one was expected to know the fundamentals of the spectrum of life and knowledge. With the proliferation of information and knowledge, this is no longer possible. But...

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...

Rather than attempt to explain what the mainly neoclassical economists are going on about, I want to step back and try to translate their debate into terms that would be understood by people who do not share the same assumptions. I am pretty sure that post-Keynesian economists have a lot to say about the topic as well, but once again, they tend to be discussing wonkish points that would elude an outsider.…I have an engineering background, and engineering is largely the science of...

It's about mathematical economics and its limitations. Don't let the title scare you off. Not at all wonkish (no math), although it helps if have some background in the controversy.Basically, it's Plato (formalism) versus Aristotle (empiricism). Most mathematicians today are Platonists, while most scientists are Aristotelians. But that is another story.Lars P. Syll’s BlogArrow-Debreu and the Bourbaki illusion of rigour Lars P. Syll | Professor, Malmo University

The problem is not so much with the modeling, actually. People are free to construct any models that please for whatever reason. The problem is with the conclusions that are drawn from the model when they exceed the limitations of the of the assumptions.This is not a problem with modeling but with logic. Drawing conclusions that exceed the scope and scale of the premises in a context other than the model is flat out illogical, and any inferences drawn on this basis are unsound, that is, do...

Silly question? Brian is responding to someone who asserted that in effect government does.  Actually, it used to be that government confiscated property to move it to government use, but that is no longer considered "proper," unless the police do it on other pretexts. In a monetary production economy, taxes are payable in "money," that is, the government's currency. What David Andolfatto apparently means is that one's purchasing power declines as a result of taxation, which is true....

On the practical side of philosophy of science. Adding nuance to Karl Popper on falsification. Further argument for the view that theories are useful but not "true." This may seem to contradict the realist view that theories are general descriptions of causal relationships. But I don't think that this is what is is implied. Rather, useful theories can be viewed as fitting the data because they reveal underlying structures that are not observed directly but only indirectly.  There is a...

All of the above, of course, is simply the fleshing out of assumptions. We assumeddiminishing productivity in the last hours, we assumed heightened productivity from a shorter working week and we assumed declining marginal utility of goods and services produced. Finally, we assumed a preference for free time over a vanishingly small increment of total income. The point is that each of these assumptions were relatively modest but when combined "add up" to a rather substantial cumulative...