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Philosophical Foundations


Different philosophies of research are introduced to illustrate how they ... Intrinsic values (good and bad) are considered knowable. 9. 10 ... – PowerPoint PPT presentation

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Title: Philosophical Foundations

Philosophical Foundations
  • Lecture 4

Organization of this lecture
  • Philosophical Foundations
  • Positivism
  • Normativism
  • Pragmatism
  • Blending the Philosophies
  • Empiricism in Research
  • The Scientific Approach

  • Different philosophies of research are introduced
    to illustrate how they contribute to economic
  • Ones philosophical beliefs affect ones choice
    of legitimate questions as well as ones
    choice of research methods (George Ladd)
  • Each philosophical position has advantages, yet
    each has problems. In practice, researchers tend
    to use a combination, stressing different
    positions for different problems.
  • These philosophies stress confirmation rather
    than discovery.

  • Contends that only factual knowledge from
    observation (the senses) is trustworthy.
    Stresses measurement.
  • Logical positivism expands this to include
    reasoning and theory as valid means to achieve
    reliable knowledge.
  • While never a dominant philosophy in economics,
    it became influential in the mid-20th century,
    with proponents such as Wassily Leontief, Milton
    Friedman, and Harry Johnson. John Maynard
    Keyness father (John Neville Keynes) was an
    early proponent in the 1890s

  • Logical positivists do not believe in the
    scientific validity of prescriptive or
    descriptive knowledge about values.
  • Only things which can be directly observed or
    measured are considered by positivists as valid
    for scientific attention.
  • Positivistic knowledge is also culturally
    dependent since culture can affect interpretation
    of observations

  • Logical positivism holds that theoretical
    concepts are only valid if theory can be
    quantified. (too extreme a position for most
  • Both facts and theories are seen as sources of
    hypotheses economists embrace this component of
  • But a problem with positivism is that many things
    that are not visible or concrete are still
  • eg. demand relationships cant be seen but are
    very real their characteristics can be

  • Logical positivism is not accepted by many
    economists, but has had a profound effect on
    economic thinking and research.
  • It has served to place more emphasis on
    measurement and quantification in economics.
  • eg. new methods in statistics and econometrics
  • Also more attention has been focused on values as
    being positivistic knowledge, when they are
    quantifiable or demonstrable.
  • eg. What things people value, or how much they
    are valued.

  • Positivism has also highlighted the importance of
  • In emphasizing the importance of providing
    evidence, personal judgments and perceptions are
    not accepted as scientific information.
  • In summary, positivism has had important and
    lasting effects on science and economic research.
    But it is too limiting a philosophy to be the
    dominant philosophy of science.

  • A collection of philosophies emphasizes that
    knowledge of the goodness or badness of
    conditions, situations, and actions is necessary
    to produce prescriptive knowledge (what ought
    to be done).
  • Normativistic knowledge in economic research
    emphasizes peoples values efficiency, welfare,
    income, standard of living, quality of life.
  • Intrinsic values (good and bad) are considered

  • However, normativism in economics is not
    concerned with moral questions of right and wrong
    (but rather good or bad, which is different).
  • Economic choices (the right choice) may entail
    selecting between several bad or unfavorable
  • Personal or private values should not be
    considered, but rather public knowledge of
    values. Emphasis is on objectivity

  • Objective Normativism refers to the position that
    the desirability of a result or outcome can be
    known, based on experience or logic.
  • Objective normativism accepts that value
    knowledge is sometimes essential for statements
    about what should be done to accomplish specific
    goals or objectives.
  • eg. The people of the world are better off
    with free trade than with restricted trade.
  • Any discipline that deals with public policy must
    use normative value judgements

  • Mainly focused on prescriptive knowledge (what
    ought to be) and emphasize problem solving.
  • Believes that positivistic value-free knowledge
    and normativistic value knowledge to be
  • Workability (appropriateness for the problem at
    hand) is the central pragmatic criterion for

  • Pragmatism became a prominent philosophical force
    in economics research in the 1920s.
  • Institutional economics (ie of societys
    institutions) pragmatically focuses on problem
  • Test of Workability is the primary test for
    reliability of prescriptive knowledge. ie. Is
    the problem solved?
  • Clarity if solution is not ambiguous or vague
  • Coherence if prescription works
  • Correspondence if consistent with what we
    already know.

  • Pragmatism plays the greatest role in
    problem-solving research, less in subject-matter
    research and the least in disciplinary research.
  • U.S educational and political systems are
    dominated by the philosophy of pragmatism, which
    stress problem-solving and workability (achieving

How the Philosophies Blend
  • Most disciplines have adopted the philosophies of
    logical positivism, objective normativism and
    pragmatism in some combination.
  • Economics is a problem-solving, decision-oriented
    discipline by nature. Many different kinds of
    problems are addressed, ranging from simple
    everyday activities to complex theoretical
    problems of cause-effect relationships.

  • The three philosophies positivism, normativism,
    and pragmatism may all be more or less
    important depending on the type of research.
  • Disciplinary (and basic theoretical) research
    focuses on logical positivism and objective
  • Subject-matter research involves all three
    philosophies. The focus is on understanding
    outcomes of proposed actions, which leads to
    guidelines and decisions.
  • Problem-solving research that addresses
    particular management of policy questions for a
    decision-maker can be both positivistic (eg.
    estimating parameters) and normativistic ( eg.
    estimating consumer surpluses)

  • All types of research are needed all are
    relevant (in different cases)
  • However, some contend that too much emphasis has
    been place on disciplinary journal publishing.
    This fosters a situation where economists only
    communicate with other economists. And only
    about theoretical issues.
  • On the other hand, most noneconomist users of
    economic research want the results to be
    intuitively obvious without understanding of
    complexities. This is unrealistic!

Empiricism in Research Methodology
  • The influence of logical positivism fostered
    interest in measurement or quantification, as
    applied to economics.
  • Empiricism goes beyond this in subjecting
    measurement results to testing. Collecting of
    social and economic data led to statistical
    methods of analysis, including estimation
  • The integration of mathematics with economic
    theory led to the development of econometrics.

  • Econometrics originated in the early 1900s and
    was augmented tremendously by the advent of
    electronic computers.
  • It is now considered essential analytical
    training for all economists.
  • Since it emphasizes empirical data and
    measurements it is both positivistic and
  • Some leading economists (eg. Leontief) argue for
    more empiricism in economics more measurement,
    reliance on data (objective observation) and
    quantitative analysis to improve scientific
    respectability of economics.

The Scientific Approach
  • The central scientific methodology (not a single
    scientific method) has the following general
  • Identify the problem/issue/question
  • Define research objectives
  • Develop approaches for achieving objectives
    (including hypotheses of expected outcomes)
  • Conduct the analysis (testing the hypothesis)
  • Interpret the results and draw conclusions
  • These steps are common to all disciplines

  • Problem identification is affected by individual
    as well as group perceptions ie. what we
    perceive as a problem.
  • Objectives, the identified set of specific goals,
    are inherently normative, ie. related to our
    values and perceptions
  • Both problem identification and objective
    specification may have a pragmatic orientation.

  • Laboratory and field sciences tend to see their
    research process as producing reliable data,
    devoting attention to proper experimental design
    to generate statistically valid numbers .
  • Social sciences see their process more in terms
    of using data to understand relationships and to
    address problems requiring decisions.
  • Physical and social science disciplines tend to
    differ in the last step of interpreting the data.
    Economists maintain that normative
    interpretation of data is often necessary with
    complex social science research.

Deduction and Induction in the Scientific Approach
  • Usually the approach in economics consists of the
    ongoing interfacing of deduction and induction.
  • Deduction is involved in developing theory and
    induction is used in validating or evaluating the
    applicability of the theory through empirical
  • Here we are concerned with how deduction and
    induction are used, rather than their relative
    merits as forms of logic.

  • Deductive reasoning starts with premises
    assumptions .
  • If the individual premises are true and complete
    and the reasoning is correct, the conclusion is

  • The most direct application of deductive
    reasoning in the scientific approach is in Step
    3, developing hypotheses.

  • Disciplinary research often involves developing
    or modifying theories, leading to hypothesized
  • Theoretical reasoning can include
  • Newly developed theories
  • New conceptual elements added to theories
  • Modification of existing theories
  • In applied research, the reasoning involves the
    application of existing theory and evaluation of
    expected outcomes.

  • Induction is an empirical process of arriving at
    new generalities from observations and does not
    depend on previous knowledge (ie theories).
  • The testing of hypotheses is largely inductive.
  • Statistical induction is the process of testing
    estimates of parameters or the amount of
    variation explained in variables describing

  • Induction cannot provide proof of a proposition
    because we cannot examine all possible evidence.
    We can only describe the probability of the
  • We cannot say that an outcome or relationship
    will always hold the underlying cause of the
    outcome or relationship could change over time.
  • But outcomes based on evidence can have a
    specified probability

  • Interpretation of results (step 5) is largely
    inductive. In examining implications, we often
    extrapolate from the specific analysis to more
    general applications.
  • eg. A representative firm can be used to reason
    through the expected behavior of an industry.
    The outcome for the industry can be estimated to
    be the outcome for the firm times the number of

  • Deduction provides the necessary implications of
    premises, which may be general (laws, axioms,
    principles) or specific (factual) induction
    examines the validity or applicability of the
  • Deductive reasoning can organize knowledge and
    deduce new relationships but is not sufficient as
    a source of new knowledge.
  • Inductive reasoning fails to use prior knowledge,
    and is therefore inefficient.
  • Both deduction and induction are necessary.