Friday, March 19, 2010

Historians and Philosophers on Empirical Failures of Neoclassical Economics

Empirical evidence went against neoclassical economics in the following three cases:
  • Empirical studies and surveys of businessmen found that they followed a full cost policy, not marginalism
  • Behavioral economists have accumulated a body of experimental evidence, including preference-reversals and violations of transitivity, that people are not utility maximizers.
  • David Card and Alan Krueger found that increased minimum wages did not decrease employment.
These incidents present data for philosophers, historians, and sociologists of economics. They can explore how mainstream economists reacted to these empirical findings. And three have done just this. Daniel Hausman and Philippe Mongin compare and contrast the reactions to full cost pricing and preference reversals. Tim Leonard compares and contrasts the reaction of mainstream economists to their findings on full cost pricing and on the minimum wage. In keeping with current trends, these articles are descriptive, not prescriptive. That is, they try to understand the positions of participants without passing judgement.


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