Economic methodology is the study of methods, especially the
scientific method
The scientific method is an Empirical evidence, empirical method for acquiring knowledge that has been referred to while doing science since at least the 17th century. Historically, it was developed through the centuries from the ancient and ...
, in relation to
economics
Economics () is a behavioral science that studies the Production (economics), production, distribution (economics), distribution, and Consumption (economics), consumption of goods and services.
Economics focuses on the behaviour and interac ...
, including principles underlying economic reasoning. In contemporary English, 'methodology' may reference theoretical or systematic aspects of a method (or several methods).
Philosophy and economics
Philosophy and economics studies topics such as public economics, behavioural economics, rationality, justice, history of economic thought, Rational choice theory, rational choice, the appraisal of economic outcomes, Institutional economics, ins ...
also takes up methodology at the intersection of the two subjects.
Scope
General
methodological
In its most common sense, methodology is the study of research methods. However, the term can also refer to the methods themselves or to the philosophical discussion of associated background assumptions. A method is a structured procedure for bri ...
issues include similarities and contrasts to the
natural science
Natural science or empirical science is one of the branches of science concerned with the description, understanding and prediction of natural phenomena, based on empirical evidence from observation and experimentation. Mechanisms such as peer ...
s and to other
social sciences
Social science (often rendered in the plural as the social sciences) is one of the branches of science, devoted to the study of society, societies and the Social relation, relationships among members within those societies. The term was former ...
and, in particular, to:
* the
definition of economics
Various definitions of economics have been proposed, including attempts to define precisely "what economists do".
Etymology
The term ''economics'' was originally known as "political economy". This term evolved from the French Mercantilist usage of ...
* the scope of economics as defined by its methods
* fundamental principles and operational significance of economic theory
*
methodological individualism
In the social sciences, methodological individualism is a method for explaining social phenomena strictly in terms of the decisions of individuals, each being moved by their own personal motivations. In contrast, explanations of social phenomen ...
versus
holism
Holism is the interdisciplinary idea that systems possess properties as wholes apart from the properties of their component parts. Julian Tudor Hart (2010''The Political Economy of Health Care''pp.106, 258
The aphorism "The whole is greater than t ...
in economics
* the role of simplifying assumptions such as
rational choice and
profit maximizing in explaining or predicting phenomena
* descriptive/
positive,
prescriptive/
normative
Normativity is the phenomenon in human societies of designating some actions or outcomes as good, desirable, or permissible, and others as bad, undesirable, or impermissible. A Norm (philosophy), norm in this sense means a standard for evaluatin ...
, and
applied uses of theory
* the scientific status and
expanding domain of economics
* issues critical to the practice and progress of
econometrics
Econometrics is an application of statistical methods to economic data in order to give empirical content to economic relationships. M. Hashem Pesaran (1987). "Econometrics", '' The New Palgrave: A Dictionary of Economics'', v. 2, p. 8 p. 8 ...
* the balance of
empirical
Empirical evidence is evidence obtained through sense experience or experimental procedure. It is of central importance to the sciences and plays a role in various other fields, like epistemology and law.
There is no general agreement on how t ...
and philosophical approaches
* the role of
experiments
An experiment is a procedure carried out to support or refute a hypothesis, or determine the efficacy or likelihood of something previously untried. Experiments provide insight into Causality, cause-and-effect by demonstrating what outcome o ...
in economics
* the role of
mathematics
Mathematics is a field of study that discovers and organizes methods, Mathematical theory, theories and theorems that are developed and Mathematical proof, proved for the needs of empirical sciences and mathematics itself. There are many ar ...
and
mathematical economics
Mathematical economics is the application of Mathematics, mathematical methods to represent theories and analyze problems in economics. Often, these Applied mathematics#Economics, applied methods are beyond simple geometry, and may include diff ...
in economics
* the writing and rhetoric of economics
* the relation between theory, observation, application, and methodology in contemporary economics.
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
Philosophy of science is the branch of philosophy concerned with the foundations, methods, and implications of science. Amongst its central questions are the difference between science and non-science, the reliability of scientific theories, ...
and the
theory of knowledge
Epistemology is the branch of philosophy that examines the nature, origin, and limits of knowledge. Also called "the theory of knowledge", it explores different types of knowledge, such as propositional knowledge about facts, practical knowledg ...
. In another direction of
philosophy and economics
Philosophy and economics studies topics such as public economics, behavioural economics, rationality, justice, history of economic thought, Rational choice theory, rational choice, the appraisal of economic outcomes, Institutional economics, ins ...
, additional subjects are treated including
decision theory
Decision theory or the theory of rational choice is a branch of probability theory, probability, economics, and analytic philosophy that uses expected utility and probabilities, probability to model how individuals would behave Rationality, ratio ...
and
ethics
Ethics is the philosophy, philosophical study of Morality, moral phenomena. Also called moral philosophy, it investigates Normativity, normative questions about what people ought to do or which behavior is morally right. Its main branches inclu ...
.
[• _____, 9942006, ]
Economic Analysis and Moral Philosophy
', 2nd ed. New York, Cambridge University Press.
See also
*
Economic systems
An economic system, or economic order, is a system of production, resource allocation and distribution of goods and services within an economy. It includes the combination of the various institutions, agencies, entities, decision-making proces ...
*
Methodology of econometrics The methodology of econometrics is the study of the range of differing approaches to undertaking econometric analysis.
The econometric approaches can be broadly classified into nonstructural and structural. The nonstructural models are based primar ...
*
Model (economics)
An economic model is a theoretical construct representing economic processes by a set of variables and a set of logical and/or quantitative relationships between them. The economic model is a simplified, often mathematical, framework designed ...
Notes
References
* John Bryan Davis, D. Wade Hands, Uskali Mäki (1998). ''Handbook of Economic Methodology'', E. Elgar
* Hands, D. Wade, ed. (1993). ''The Philosophy And Methodology Of Economics'', Duke University
* Hausman, Daniel M. (1984).
The Philosophy of Economics: An Anthology'. New York: Cambridge University Press,
* Boland, L. (1982) ''The Foundations of Economic Method'', London: Geo. Allen & Unwin.
* Boland, L. (1989)
The Methodology of Economic Model Building: Methodology after Samuelson', London: Routledge.
* Boland, L. (1997)
Critical Economic Methodology: A Personal Odyssey', London: Routledge
* Boland, L. (2003) The Foundations of Economic Method: A Popperian Perspective, London: Routledge
* D.N. McCloskey (1983).
The Rhetoric of Economics', Univ of Wisconsin Press, 1998
* Daniel M. Hausman (1992).
Essays on Philosophy and Economic Methodology', Cambridge University Press, 1992
* Nell, E.J. and Errouaki, K. (2011) ''Rational Econometric Man''. Edward Elgar.
* Düppe, T. (2011).
How Economic Methodology Became a Separate Science', Journal of Economic Methodology, 18 (2): 163-176.
External links
*
Journal of Economic Methodology' - page @
EconPapers
* Daniel M. Hausman
Philosophy of Economics(with focus on methodology), ''Stanford Encyclopedia of Philosophy''
*
Milton Friedman
Milton Friedman (; July 31, 1912 – November 16, 2006) was an American economist and statistician who received the 1976 Nobel Memorial Prize in Economic Sciences for his research on consumption analysis, monetary history and theory and ...
"The Methodology of Positive Economics"(excerpts)
{{Economics
Interdisciplinary subfields of economics