13 - The Inexact Deductive Method

Summary

Chapter 13 returns to Mills inexact deductive method, as developed in chapter 10, concedes that it is too dogmatic, but shows how economics can be scientifically respectable, even though economists appear to conform to this method. The peculiarities of theory appraisal in economics follow more from the difficulties of testing in economics than from an aberrant view of confirmation. Although apparent Millians in practice, economists can be good Bayesians or hypothetico-deductivists in principle. Chapter 13 also considers some of the anomalies to which expected utility theory gives rise and provides an introductory overview of the innovations that behavioral economics has brought into the mainstream. This chapter shows how disconfirmation of basic principles of economics is possible and exposes the large and legitimate role that pragmatic factors play in theory appraisal in economics.