David Bourget (Western Ontario)
David Chalmers (ANU, NYU)
Rafael De Clercq
Ezio Di Nucci
Jack Alan Reynolds
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Philosophy of the Social Sciences 38 (3):334-360 (2008)
Many models in economics are very unrealistic. At the same time, economists put a lot of effort into making their models more realistic. I argue that in many cases, including the Modigliani-Miller irrelevance theorem investigated in this paper, the purpose of this process of concretization is explanatory. When evaluated in combination with their assumptions, a highly unrealistic model may well be true. The purpose of relaxing an unrealistic assumption, then, need not be to move from a false model to a true one. Instead, it may be providing an explanation of some phenomenon by invoking the factor that figures in the assumption. This idea is developed in terms of the contrastive account of explanation. It is argued that economists use highly unrealistic assumptions to determine a contrast that is worth explaining. The process of concretization also motivates new explanatory questions. A high degree of explanatory power, then, may well be due to a high number of unrealistic assumptions. Thus, highly unrealistic models can be powerful explanatory engines. Key Words: concretization • explanation • explanatory power • idealization • model • Modigliani-Miller theorem • unrealistic assumption.
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J. Kuorikoski, A. Lehtinen & C. Marchionni (2010). Economic Modelling as Robustness Analysis. British Journal for the Philosophy of Science 61 (3):541-567.
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Jaakko Kuorikoski, Aki Lehtinen & Caterina Marchionni (2012). Robustness Analysis Disclaimer: Please Read the Manual Before Use! Biology and Philosophy 27 (6):891-902.
Frank Hindriks (2013). Explanation, Understanding, and Unrealistic Models. Studies in History and Philosophy of Science Part A 44 (3):523-531.
Raphael van Riel (2015). The Content of Model-Based Information. Synthese 192 (12):3839-3858.
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