The Philosophy and Methodology of Economics

This syllabus was originally taught at the Duke University in Spring 2022.
Instructor: Kevin Hoover

Course Description

An introduction to conceptual and methodological issues raised in modern economics. Topics include positive and normative economics, rationality, models, economic explanation, conceptual issues in econometrics and economic experiments, the nature of economic science.The course is mainly a seminar based on active participation in class discussion. There will be a few lectures.

Background

• Daniel Hausman, “Economic Methodology in a Nutshell,”Journal of Economic Perspectives3(2), 1989, pp. 115-127.
• Daniel Hausman, “Appendix: An Introduction to Philosophy of Science,” The Inexact and Separate Science of Economics. Cambridge: Cambridge University Press, 1992, pp. 281-329.
• Marcel Boumans and John Davis, Economic Methodology: Understanding Economics as a Science. Basingstoke, Hampshire, UK: Palgrave Macmillan, 2010.

1. A Real Economic Problem

• (i) Charles Brown, “Minimum Wage Laws: Are They Overrated?” Journal of Economic Perspectives2(3), Summer 1988, pp. 133-145.
• (ii) Alan Manning, “The Truth About the Minimum Wage: Neither Job Killer Nor Cure-All,” Foreign Affairs, January-February 2018, pp. 126-134.

2. Values in Economics

• (i) Mark Blaug. “The Positive-Normative Distinction,’ in John Davis, D. Wade Hands and Uskali Mäki, editors, The Handbook of Economic Methodology. Cheltenham: Edward Elgar, 1998, pp. 370-374.
• (ii) Fritz Machlup, “Positive and Normative Economics: An Analysis of Ideas,” in Robert Heilbroner, editor, Economic Means and Social Ends: Essays in Political Economics, 1969, pp. 99-129.
• Julian Reiss (2017) “Fact-Value Entanglement in Positive Economics,”Journal of Economic Methodology, 24(2), pp. 134-149.
• il 345/Econ 319The Philosophy and Methodology of EconomicsSyllabus, Spring 202233.

3. Economic Rationality

• A. Karl Brunner and William H. Meckling, “The Perception of Man and the Conception of Government,” Journal of Money,Credit and Banking9(No. 1, Part 1), February 1977, pp. 70-85.
• Jon Elster, “The Nature and Scope of Rational Choice,” in E. Ullmann-Margalit, editor, Science in Reflection, 1988, pp. 51-65. in Caldwell I pp, 425-439.
• F.A. Hayek, “The Use of Knowledge in Society,” American Economic Review35(4), pp. 519-530.

4. Logic

• Hoover, “Notes on Logic.”[These notes are a supplement to the lecture on Logic.]

5. Economic Models

• (i) Marcel Boumans, “Models,” in John Davis, Alain Marciano and Jochen Runde, The Elgar Companion to Economics and Philosophy. Cheltenham: Edward Elgar, 2004, pp. 260-282.
• (ii) Mary Morgan, “Models as a Method of Inquiry,” in Morgan, The World in the Model: How Economists Think. Cambridge: Cambridge University Press, ch. 1, pp. 1-38.
• Allan Gibbard and Hal Varian, “Economic Models,”Journal of Philosophy75(11), 1978, pp. 664-677.
• Robert Sugden, “Credible Worlds: The Status of Theoretical Models in Economics,” Journal of Economic Methodology7(1), 2000, pp. 1-31.

6. Economic Explanation

• (i) Karl Popper, “The Rationality Principle,” in David Miller, ed., A Pocket Popper. London: Fontana, 1983.
• (ii) Noretta Koertge, “The Methodological Status of Popper’s Rationality Principle,” Theory and Decision10(1), 1979, pp. 83-95.
• (i) Karl Popper, “Science: Conjectures and Refuations,” in Conjectures and Refutations. London: Routledge and Kegan Paul, 1963, pp. 33-58.
• (ii) Bruce Caldwell, “Clarifying Popper,” Journal of Economic Literature29(1), March 1991, pp. 1-33.
• Nancy Cartwright, “Ceteris Paribus Laws and the Socio-economic Machine,” in the Dappled World. Cambridge: Cambridge University Press, 1999, ch. 6 (pp. 137-151).
• John Dupré, “Economics without Mechanism,” in Uskali Mäki, editor, The Economic World View, Cambridge, 2001, pp. 308-334.

7. Experiments in Economics

• Mary Morgan, “Model Experiments,” in Morgan, The World in the Model: How Economists Think. Cambridge: Cambridge University Press, ch. 7, pp. 256-300.
• Smith, “Economics in the Laboratory,” in Daniel Hausman, editor, The Philosophy of Economics: An Anthology, ch. 18, pp. 334-356.
• Menno Rol and Nancy Cartwright, “Warranting the Use of Causal Claims: A Non-trivial Case for Interdisciplinarity,” Theoria74, 2012, pp. 189-202.

8. Econometrics

• Kevin, D. Hoover, “The Role of Hypothesis Testing in the Molding of Econometric Models,” Erasmus Journal for the Philosophy of Economics6(2), Autumn 2013, pp. 42-65.
• Joshua D. Angrist and Alan B. Krueger, “Instrumental Variables andthe Search for Identification: From Supply and Demand to Natural Experiments,” Journal of Economics Perspectives15(4), (Autumn, 2001), pp. 69-85.B.
• (i) Kevin D. Hoover, The Methodology of Empirical Macroeconomics, Ch. 1, “Some Methodological Problems inMacroeconomics”; and Ch. 2, “Are There Macroeconomic Laws,” Cambridge: Cambridge University Press, 2001. [Note: the meat of this reading is in Chapter 2, but the short Chapter 1 is necessary background to Chapter 2.]
• (ii) Kevin D. Hoover, “Econometrics as Observation: The Lucas Critique, Causality and the Nature of Econometric Inference,”Journal of Economic Methodology, June 1994.

9. Just What Is Economics After All?

• John Stuart Mill, “On the Definition of Political Economy and the Method of Investigation Proper to It,”in Essays on Some Unsettled Questions of Political Economy, 1844.
• Alfred Marshall, “The Present Position of Economics,” 1885.
• Lionel Robbins, The Nature and Significance of Economic Science (Part I, Part II), 2ndedition 1935 (first edition 1932).

10. Friedman 1953: The One Methodology Paper Every Economists Knows

• Milton Friedman, “The Methodology of Positive Economics,” in Friedman, Essays in Positive Economics. Chicago: University of Chicago Press, 1953.
• (i) Daniel Hausman “Why Look Under the Hood?” in Essays on Philosophy and Economic Methodology. Cambridge: Cambridge University Press, 2008, ch. 5, pp. 70-74.
• (ii) Kevin Hoover, “Milton Friedman’s Stance:The Methodology of Causal Realism,” in Uskali Mäki, editor,The Methodology of Positive Economics: Milton Friedman’s Essay Fifty Years Later.Cambridge: Cambridge University Press, 2009, pp. 303-320.

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