John Stuart Mill wrote an essay on the methodology of economics or rather, in the language of his day, Political Economy. I look at it in a Whiggish fashion to show some of his ideas are still around today, namely:
- The distinction between positive and normative propositions
- The notion of economic man as being motivated solely by monetary considerations (Homo Economicus)
- The argument that economics should be a deductive, not an inductive, science
- The complexity of society and the nature of humankind precludes controlled experimentation
2.0 Positive Versus Normative Propositions
J. S. Mill introduces a distinction between positive and normative propositions. He uses the terms "science" and "art". Mill thinks political economy is and should be a science.
"... the essentially distinct, though closely connected, ideas of science and art. These two ideas differ from one another as the understanding differs from the will, or as the indicative mood in grammar differs from the imperative. The one deals in facts, the other in precepts. Science is a collection of truths; art, a body of rules, or directions for conduct. The language of science is, This is, or, This is not; This does, or does not, happen. The language of art is, Do this; Avoid that. Science takes cognizance of a phenomenon, and endeavours to discover its law; art proposes to itself an end, and looks out for means to effect it.This particular essay was originally published in the October 1836 issue of the London and Westminster Review. The page numbers refer to the fourth volume of The Collected Works of John Stuart Mill, from 1967.
If, therefore, Political Economy be a science, it cannot be a collection of practical rules; though, unless it be altogether a useless science, practical rules must be capable of being founded upon it." -- J. S. Mill, "On the Definition of Political Economy; and on the Method of Investigation Proper to It", in Essays on Some Unsettled Questions of Political Economy (1844: 312).
In discussing the relationship of art to science, Mill echoes a distinction between "empirics" and "technique" (if I guess correctly from my knowledge of the greek alphabet) to be found in the "Gorgias" of Plato. Technique, in this sense, is art founded on science.
Mill, in discussing an analogy accompanying a definition of economics that he ultimately rejects, writes:
"domestic economy, so far as it is capable of being reduced to principles, is an art. It consists of rules, or maxims of prudence, for keeping the family regularly supplied with what its wants require, and securing, with any given amount of means, the greatest possible quantity of physical comfort and enjoyment." -- J. S. Mill (1844: 313)And Mill proposes a definition for criticism:
"Political Economy [is] the science which treats of the production and distribution of wealth, so far as they depend upon the laws of human nature." -- J. S. Mill (1844: 318)
3.0 Homo Economicus
Mill says economics is a type of moral or psychological science, as opposed to a physical science (p. 316 for the distinction). Mill decomposes the subject matters of the moral sciences:
"We may inquire what belongs to man considered individually, and as if no human being existed besides himself; we may next consider him as coming into contact with other individuals; and finally, as living in a state of society, that is, forming part of a body or aggregation of human beings, systematically co-operating for common purposes." -- J. S. Mill (1844: 319)Mill, insofar as he is interested in the social sciences, is concerned with the "laws of human nature in the social state" (p. 320). Here is an important grouping of the moral sciences:
"The science of social economy embraces every part of man's nature, in so far as influencing the conduct or condition of man in society; and therefore may it be termed speculative politics ..." -- J. S. Mill (1844: 320)Mill then defines a part:
"'Political Economy' is not the science of speculative politics, but a branch of that science. It does not treat of the whole of man's nature as modified by the social state, nor of the whole conduct of man in society. It is concerned with him solely as a being who desires to possess wealth, and who is capable of judging of the comparative efficacy of means for obtaining that end. It predicts only such of the phenomena of the social state as take place in consequence of the pursuit of wealth. It makes entire abstraction of every other human passion or motive; except those which may be regarded as perpetually antagonizing principles to the desire of wealth, namely, aversion to labour, and desire of the present enjoyment of cosily indulgences." -- J. S. Mill (1844: 321)
"Political Economy considers mankind as occupied solely in acquiring and consuming wealth; and aims at showing what is the course of action into which mankind, living in a state of society, would be impelled, if that motive, except in the degree in which it is checked by the two perpetual counter-motives above adverted to, were absolute ruler of all their actions." -- J. S. Mill (1844: 322)I think Mill's language here is echoed by some "libertarians":
"[Political economy] shows mankind ... establishing laws to prevent individuals from encroaching upon the property of others by force or fraud" -- J. S. Mill (1844: 322)Mill draws an analogy between the effects of the motives treated by political economy and all other motives with the superposition of forces in Newtonian astronomy (p. 322). And he states that the motives not treated in Political Economy are "disturbing causes" resembling "frictions in mechanics" (p. 330).
Here is Mill's approved definition of Political Economy:
"The science which traces the laws of such of the phenomena of society as arise from the combined operations of mankind for the production of wealth, in so far as those phenomena are not modified by the pursuit of any other object." -- J. S. Mill (1844: 323)Mill has much else to say of interest, e.g.:
"... those who are accused of despising facts and disregarding experience build and profess to build wholly upon facts and experience; while those who disavow theory cannot make one step without theorizing." -- J. S. Mill (1844: 324)
4.0 Economics as a Deductive Science
Mill characterizes Political Economy:
"as essentially an abstract science, and its method as the method a priori." -- J. S. Mill (1844: 325)
5.0 Economics as Not Supporting Controlled Experimentation
"There is a property common to almost all the moral sciences, and by which they are distinguished from many of the physical; this is, that it is seldom in our power to make experiments in them. -- J. S. Mill (1844: 327)Mill talks about the "circumstances, moreover, of great complexity" (p. 327) in which observations for Political economy are generated. And he refers to the inability of "rarely obtain[ing] an experimentum crucis." -- J. S. Mill (1844: 328).
Economists have recently been performing controlled experiments. I refer not only to behaviorial economics, but also to field experiments.