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The Scientific Method and Economics Phillip Tussing

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Traditional Scientific Method But it doesn’t describe reality of how science works

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Science Flowchart This is more realistic

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The Cultural Side The scientific community and the educational institution can rightly be considered ‘subcultures’ each with its own set of material and nonmaterial components. Scientists, including social scientists, share a set of beliefs, values, and norms and employ various material items that form the toolkits of both the natural and social sciences.

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Emic vs Etic As it turns out, this distinction in the point of view of the analyst, which originated in anthropology, is important in economics as well

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Philosophy of Science: Karl Popper, 1902-1994 Falsification: a theory is scientific when it is capable of being proven false by reproducible evidence

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Philosophy of Science: Thomas Kuhn, 1922-1996 Paradigm Shift: science is a set of methods of discovery and understanding; periodically those methods go through a revolution and new methods become standard.

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Economics Paradigms 1: Mainstream US & UK -Classical Economics: Adam Smith to Alfred Marshall. Focus on Microeconomics, the long term, free markets -Keynesian Economics: John Maynard Keynes to John Kenneth Galbraith. Focus on Macroeconomics and the government’s ability to manage the economy

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Econ Paradigms 2: Socialism Marxist: revolution by the working class displaces capitalists, so that workers own the means of production

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Economics Paradigms 3 -Monetarism: Milton Friedman. Focus on the ability of the Central Bank to mange the economy; de-emphasize fiscal policy -Austrian School: Friedrich Hayek, Ludwig von Mises. Built around the ideas of free markets, minimal govt intervention, anti-socialism

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Economics Paradigms 4: Libertarianism -“Capitalism is a social system based on the recognition of individual rights, including property rights, in which all property is privately owned.” -Ayn Rand