Sunday, May 02, 2010

Empirical Results in a Whig History of Mainstream Economics

A comprehensive history of physics would not be only about changing ideas and the social setting in which they evolved. It would include stories of many experiments. One might talk about Galileo, the moons of Jupiter, inclined planes, and pendulums. One would have experiments that demonstrate a result long after physicists became convinced of it for other reasons. I think Foucault'a pendulum and the rotation of the earth falls into this category. And one would have empirical results that were cited at times of paradigm shifts - for example, the Michelson Morley experiment and precession of Mercury's orbit for Einstein's theory of special and general relativity, respectively.

What would go into a corresponding history of economics? I suppose one would mention unemployment in the Great Depression and stagflation during the 1970s. Notice these phenomena are not controlled experiments. Vernon Smith's experiments would enter into such a history. I'm not sure where Kahneman and Tversky's prospect theory would go. I suppose it is a triumph for neoclassical economics that it can be formulated sufficiently rigorously that it can be shown experimentally to be false. I suppose natural and field experiments are too recent to get a good historical perspective on. Looking back, one might mention Wesley Clair Mitchell and the National Bureau of Economic Research. I like Wassily Leontief's work. One might mention Richard Stone and work on setting up the system of national accounts. But, as far as I am aware, this gathering of a body of empirical data is not tightly linked to changes in economic theory. What am I missing?


BruceMcF said...

In the first case, you are discussing a field of study largely pursued as a science ... in the second case, largely not.

An examination of "theoretical advances" and impact of empirical work in alchemy would likely show a similar disconnect.

Robert Vienneau said...

Bruce, thanks for the comment. I was hoping a defender of neoclassical economics could point to something empirical in economics that supposedly had something to do with the marginal revolution. I really don't think the diamond-water paradox cuts it.

Anonymous said...


I will gladly serve that roll. The existence of the prices of water and diamonds was itself empirical evidence against Classical economics. Its easy to confuse Classical and Neoclassical, but neoclassical was itself a theory built on empirical refutation of Classical economics.