THE LOGIC OF SCIENTIFIC METHOD IN ECONOMICS

In: Journal of economic studies, Band 4, Heft 1, S. 1-28

Abstract

Keynes' criticisms of Tinbergen's pioneering econometric work are traced back to Keynes' concept of "inductive probability logic". Induction had already been rejected by Popper as the basis of scientific method. He argued that theories could be corroborated but not proved by the failure of attempts to falsify them by observation and experiment. Economic theory is proto‐theory, which is not fully falsifiable, but which yields falsifiable results if appropriate econometric methods, or a method‐theory is applied to it. A useful method‐theory needs to go beyond description and forecasting to policy optimisation.