Economic methodology

As exampled by the work of Nassau William Senior (1790-1864), and English economists John Stuart Mill (1806-1873) and John Maynard Keynes (1883-1946), economic methodology is the process by which economics is explained: the philosophy of science applied to economics.

In the 19th century, British economists examined the premises of economic theory, arguing that the verification of economic theory was hazardous at best.

Today, there is debate as to how useful methodology is in the training of modern economists. MARK BLAUG has argued that economic methodology can set the criteria for the acceptance and rejection of research programs. Empirical testing has become an integral part of 20th century economic study.

M Blaug, The Methodology of Economics, or How Economists Explain (Cambridge and New York, 1980);
Joseph A Schumpeter, History of Economic Analysis (New York, 1957)

General methodological issues include similarities and contrasts to the natural sciences and to other social sciences and, in particular, to:

  • the definition of economics[2]
  • the scope of economics as defined by its methods[3]
  • fundamental principles and operational significance of economic theory[4]
  • methodological individualism versus holism in economics[5]
  • the role of simplifying assumptions such as rational choice and profit maximizing in explaining or predicting phenomena[6]
  • descriptive/positive, prescriptive/normative, and applied[7] uses of theory[8]
  • the scientific status[9] and expanding domain of economics[10]
  • issues critical to the practice and progress of econometrics[11]
  • the balance of empirical and philosophical approaches[12]
  • the role of experiments in economics[13]
  • the role of mathematics and mathematical economics in economics[14]
  • the writing[15] and rhetoric of economics[16]
  • the relation between theory, observation, application, and methodology in contemporary economics.[17]

Economic methodology has gone from periodic reflections of economists on method to a distinct research field in economics since the 1970s. In one direction, it has expanded to the boundaries of philosophy, including the relation of economics to the philosophy of science and the theory of knowledge[18] In another direction of philosophy and economics, additional subjects are treated including decision theory and ethics.[19]

See also

  • Economic systems
  • Methodology of econometrics
  • Model (economics)

4 thoughts on “Economic methodology

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