People have thought about economics for as long as they have thought about how to manage their households, and indeed Aristotle assimilated the study of the economic affairs of a city to the study of the management of a household. During the two millennia between Aristotle and Adam Smith, one finds reflections concerning economic problems mainly in the context of discussions of moral or policy questions. For example, scholastic philosophers commented on money and interest in inquiries concerning the justice of (...) "usury" (charging interest on money loans), and in the 17th century, there was a great deal of discussion of policy concerning foreign trade. Economics only emerged as a distinct field of study with the bold 18th-century idea that there were "economies"--that is autonomous law-governed systems of human interaction involving production, distribution and exchange. This view is already well developed in Adam Smith's Wealth of Nations, from which much of economics derives. (shrink)
No doubt men are capable even now of much more unselfish service than they generally render; and the supreme aim of the economist is to discover how this latent social asset can be developed more quickly and turned to account more wisely. (Alfred Marshall, Principles of Economics , p. 8).
Many questions concerning health involve values. How well is a health system performing? How should resources be allocated between the health system and other uses or among competing healthrelated uses? How should the costs of health services be distributed among members of a population? Who among those in need of transplants should receive scarce organs? What is the best way to treat particular patients? Although many kinds of expertise bear on these questions, values play a large role in answering them. (...) These values are of many kinds – judgments about how health states contribute to the well-being of individuals depend on views about what is good for a person, whereas judgments about how to share the costs of health care or about how to distribute scarce organs among those in need of transplants depend on theories of fairness. The value judgments that need to be made are not only multifaceted and heterogeneous; they are also controversial. Both the understanding of the questions and the substance of the answers may vary widely from individual to individual and among different groups within countries and across national boundaries. How are these many complicated, difficult and controversial evaluative questions to be answered? This could be a question about who should answer them as well as a question about how they should be answered. There are various possible mechanisms, and there is no reason why the same method should be employed to answer every question. Among the possible methods are (1) moral argument, (2) political deliberation and (3) eliciting preferences or judgments from some group. Included in the third method lie many different techniques of elicitation. For example, one could study attitudes by the use of deliberative (focus) groups, by permitting individual choice in some sort of market or quasi-market, by polling or by voting. These methods of answering evaluative questions are not always incompatible with one another. Moral argument can play a role within political deliberation, deliberation by focus groups, individual market choice, or voting.. (shrink)
Beware of economists bearing advice. Though some of it is valuable, the framework of theoretical welfare economics from which economic advice usually issues has serious normative limitations and distortions. When economists go beyond identifying consequences of policies to making recommendations, they typically rely on a theory whose only normative concern is welfare and its distribution and that mistakenly identifies welfare with the satisfaction of preferences. Their advice about how to increase welfare must accordingly be regarded with caution, and policy makers (...) must not forget that increasing welfare should not be their only goal. (shrink)
Economists disagree about whether they should aim to provide explanations, about what they should aim to explain, and about how they should go about explaining. This essay will address all three of these controversies. I shall argue (1) that explanation is a central task in economics, (2) that one should adopt an explicitly causal model of explanation, (3) that economists cannot avoid explaining individual choices and they should attempt to explain the paths that take the economy from one equilibrium to (...) another, and (4) that explanations in economics cite reasons as well as causes. Most of these points apply across different schools of economics, but “economics” in this paper should thus be read as “mainstream economics.”. (shrink)
Samuel Bowles and Herbert Gintis want to redirect egalitarianism away from redistribution of income and toward redistribution of assets, particularly productive assets. <1> Their main reason, apart from the fact that income redistribution is so obviously dead in the political waters, is that income redistribution lowers productivity and competitiveness, while asset redistribution raises these, and in the long run the welfare of the worst-off depends more on increasing productivity than it does on distribution. Compound interest is a wonderful thing. Young (...) workers in an inegalitarian society growing at 5% per year making half the wages of those in an egalitarian society growing at 1/2% per year will catch up in 16 years and by the time of their retirement will have four times the income. Bowles and Gintis argue that such mathematics, which has long been an argument for inegalitarian trickle-down policies, in fact supports egalitarian asset redistributions. (shrink)
This paper makes a modest point. Suppose one wants to evaluate alternative policies, institutions or even constitutions on the basis of their consequences. To do so, one needs to evaluate their consequences and one needs to know what their consequences are. Let us suppose that the role of economic theories and game theory in particular is mainly to help us to use information we already possess or that we can acquire at a reasonable cost to judge what the consequences will (...) be. We do not necessarily need true theories or theories that provide perfectly precise predictions. What sort of accuracy and precision we need depends on how the consequences of alternative policies are evaluated. The worth of an economic theory in this context of policy assessment depends on the accuracy of the predictions the theory permits, the costs of gathering the needed information, and the costs of learning and using the theory. My only excuse for uttering these truisms is that well known economists and philosophers have denied them. (shrink)
People condemn inequalities for many reasons. For example, many who have no concern with distribution per se criticize inequalities in health care, because these inequalities lessen the benefits provided by the resources that are devoted to health care. Others who place no intrinsic value on distribution believe that a just society must show a special concern for those who are worst off. Some people, on the other hand, do place an intrinsic value on equality of distribution, regardless of its contribution (...) to other goals. Derek Parfit and Larry Temkin call these people "egalitarians." I shall always employ quotation marks when referring to "egalitarians" in this special sense, because, as I shall argue, this terminology is misleading. One of its unhappy implications is that almost all egalitarians are not "egalitarians.". (shrink)
There is no way literally to measure health, because health is multi-dimensional, and there is no metric whereby one person who is healthier than a second with respect to one dimension but less healthy with respect to another counts as healthier, less healthy or equally healthy overall. Health analysts instead measure how good or bad health states are in some regard. If these values are measures of health states, then identical health states must have identical values. But in different circumstances, (...) the same health state may have different values. It may be better or worse. Uniform values can nevertheless be assigned to kinds of health states, either as a weighted average of the values of their tokens or as the value of the performance in a standard environment of the capacity the health state constitutes. These uniform values are not well suited for some of the purposes for which summary measures of population health have been intended, and a set of non-evaluative indicators may be an attractive alternative. (shrink)
This paper argues that egalitarian theories should be judged by the degree to which they meet four different challenges. Fundamentalist egalitarianism, which contends that certain inequalities are intrinsically bad or unjust regardless of their consequences, fails to meet these challenges. Building on discussions by T.M. Scanlon and David Miller, we argue that egalitarianism is better understood in terms of commitments to six egalitarian objectives. A consequence of our view, in contrast to Martin O'Neill's “non-intrinsic egalitarianism,“ is that egalitarianism is better (...) understood as a family of views than as a single ethical position. (shrink)
Preferences are the central notion in mainstream economic theory, yet economists say little about what preferences are. This article argues that preferences in mainstream positive economics are comparative evaluations with respect to everything relevant to value or choice, and it argues against three mistaken views of preferences: (1) that they are matters of taste, concerning which rational assessment is inappropriate, (2) that preferences coincide with judgments of expected self-interested benefit, and (3) that preferences can be defined in terms of choices.
The health gradient among those who are by historical standards both remarkably healthy and well-off is of considerable moral importance with respect to benevolence, justice and the theory of welfare. Indeed it may help us to realize that for most people the good life lies in close and intricate social ties with others which can flourish only when inequalities are limited. The health gradient suggests that there is a story to be told in which egalitarian justice, solidarity, health and well-being (...) go hand-in-hand. (shrink)
This essay is concerned with the problems of justice created by spillovers. After characterizing such spillovers more precisely and relating the concept to the economist's notion of an externality, I shall then consider the moral conclusions concerning spillovers that issue from a natural rights perspective and from the perspective of welfare economics supplemented with theories of distributive justice. I shall argue that these perspectives go badly awry in taking spillovers to be the exception rather than the rule in human interactions.
This essay comments on the theory of social norms developed by Cristina Bicchieri in The Grammar of Society ( 2006 ). It applauds her theory of norms but argues that it cannot account for the experimental results concerning ultimatum games. A theory of fairness is also needed. It develops a number of specific criticisms of her way of incorporating the influence of norms into preferences. †To contact the author, please write to: Department of Philosophy, University of Wisconsin–Madison, 5197 Helen C. (...)White Hall, 600 N. Park Street, Madison, WI 53706‐1474; e‐mail: dhausman@wisc.edu. (shrink)
This is a comprehensive anthology of works concerning the nature of economics as a science, including classic texts and essays exploring specific branches and schools of economics. Apart from the classics, most of the selections in the third edition are new, as are the introduction and bibliography. No other anthology spans the whole field and offers a comprehensive introduction to questions about economic methodology.
This is a comprehensive anthology of works concerning the nature of economics as a science, including classic texts and essays exploring specific branches and schools of economics. Apart from the classics, most of the selections in the third edition are new, as are the introduction and bibliography. No other anthology spans the whole field and offers a comprehensive introduction to questions about economic methodology.
: This essay distinguishes between two kinds of group harms: harms to individuals in virtue of their membership in groups and harms to "structured" groups that have a continuing existence, an organization, and interests of their own. Genetic research creates risks of causing both kinds of group harms, and engagement with the groups at risk can help to mitigate those harms. The two kinds of group harms call for different kinds of group engagement.
This book shows through accessible argument and numerous examples how understanding moral philosophy can improve economic analysis, how moral philosophy can benefit from economists' analytical tools, and how economic analysis and moral philosophy together can inform public policy. Part I explores rationality and its connections to morality. It argues that in defending their model of rationality, mainstream economists implicitly espouse contestable moral principles. Part II concerns welfare, utilitarianism and standard welfare economics, while Part III considers important moral notions that are (...) left out of standard welfare economics, such as freedom, rights, equality, and justice. Part III also emphasizes the variety of moral considerations that are relevant to evaluating policies. Part IV then introduces technical work in social choice theory and game theory that is guided by ethical concepts and relevant to moral theorizing. Chapters include recommended readings and the book includes a glossary of relevant terms. (shrink)
While very much in Sen's camp in rejecting revealed preference theory and emphasizing the complexity, incompleteness, and context dependence of preference and the intellectual costs of supposing that all the factors influencing choice can be captured by a single notion of preference, this essay contests his view that economists should recognize multiple notions of preference. It argues that Sen's concerns are better served by embracing a single conception of preference and insisting on the need for analysis of the multiple factors (...) that determine ‘preference’ so conceived. (shrink)
This paper considers whether game theory can be tested, what difficulties experimenters face in testing it, and what can be learned from attempts to test it. I emphasize that tests of game theory rely on fallible assumptions concerning particular features of the strategic situation and of the players. These do not render game theory untestable in principle, but they create serious problems. In coping with these problems, experimenters may use game theory to learn what games experimental subjects are playing.
The literature on causation distinguishes between causal claims relating properties or types and causal claims relating individuals or tokens. Many authors maintain that corresponding to these two kinds of causal claims are two different kinds of causal relations. Whether to regard causal relations among variables as yet another variety of causation is also controversial. This essay maintains that causal relations obtain among tokens and that type causal claims are generalizations concerning causal relations among these tokens.
: This commentary distinguishes five reasons why one might want to conduct a survey concerning people's beliefs about death and the permissibility of harvesting organs: (1) simply to learn what people know and want; (2) to determine if current law and practice conform to the wishes of the population; (3) to determine the level of popular support for or opposition to policy changes; (4) to ascertain the causes and effects of popular beliefs and attitudes; and (5) to provide guidance in (...) determining which laws and practices are ethical. The commentary expresses qualms about how well surveys in general can perform with respect to the fifth objective, and it provides specific reasons to doubt whether this survey is informative from the perspective of a moral philosopher concerned with the nature of death and the contours of a permissible system of organ procurement. (shrink)
expose some gaps and difficulties in the argument for the causal Markov condition in our essay ‘Independence, Invariance and the Causal Markov Condition’ ([1999]), and we are grateful for the opportunity to reformulate our position. In particular, Cartwright disagrees vigorously with many of the theses we advance about the connection between causation and manipulation. Although we are not persuaded by some of her criticisms, we shall confine ourselves to showing how our central argument can be reconstructed and to casting doubt (...) on Cartwright's claim that the causal Markov condition typically fails when there are indeterministic by-products. Why believe the causal Markov condition? Causation and manipulation The argument Indeterministic by-products and the causal Markov condition The chemical factory counterexample and PM2 Conclusions: causation and manipulability. (shrink)
This paper explores the relationship between a manipulability conception of causation and the causal Markov condition (CM). We argue that violations of CM also violate widely shared expectations—implicit in the manipulability conception—having to do with the absence of spontaneous correlations. They also violate expectations concerning the connection between independence or dependence relationships in the presence and absence of interventions.
Game theory poses problems for modeling rational belief, but it does not need a new theory of rationality. Experimental results that suggest otherwise often reveal difficulties in testing game theory, rather than mistakes or paradoxes. Even though the puzzles Colman discusses show no inadequacy in the standard theory of rationality, they show that improved models of belief are needed.
Health inequalities are of concern both becausestudying them may help one learn how to improvehealth and because health inequalities may beunjust. This paper argues that attending tothese reasons why health inequalities may beimportant undercuts the claims of researchersat the World Health Organization in favor offocusing on individual health variation ratherthan on social group health differences. Inequalities in individual health are of littleinterest unless one goes on to study how theyare related to other factors.
The notion of ‘revealed preference’ is unclear and should be abandoned. Defenders of the theory of revealed preference have misinterpreted legitimate concerns about the testability of economics as the demand that economists eschew reference to (unobservable) subjective states. As attempts to apply revealed-preference theory to game theory illustrate with particular vividness, this demand is mistaken.
This essay explains what the Causal Markov Condition says and defends the condition from the many criticisms that have been launched against it. Although we are skeptical about some of the applications of the Causal Markov Condition, we argue that it is implicit in the view that causes can be used to manipulate their effects and that it cannot be surrendered without surrendering this view of causation.
This essay is concerned with the special difficulties that arise in testing and appraising mainstream economic theory. I argue that, like other theories designed to apply to complex open systems, it is very hard to confirm mainsteam economics. Parts can be tested and appraised, but the theory is only very weakly supported by evidence.
This book, by one of the pre-eminent philosophers of science writing today, offers the most comprehensive account available of causal asymmetries. Causation is asymmetrical in many different ways. Causes precede effects; explanations cite causes not effects. Agents use causes to manipulate their effects; they don't use effects to manipulate their causes. Effects of a common cause are correlated; causes of a common effect are not. This book explains why a relationship that is asymmetrical in one of these regards is asymmetrical (...) in the others. Hausman discovers surprising hidden connections between theories of causation and traces them all to an asymmetry of independence. This is a major book for philosophers of science that will also prove insightful to economists and statisticians. (shrink)
Abstract Contrary to Peter J. Boettke's essay, ?What Went Wrong with Economics??, there is no connection between ?formalism? and the alleged inability of mainstream economists to regard theoretical models as anything other than either depictions of real market economies or bases for criticizing market economies and justifying government intervention. Although Boettke's criticisms of the excesses of formalism are justified, Austrian economists such as Boettke need to justify their view that government interventions into economic affairs are inevitably harmful.
This paper explores versions of agency or manipulability theories of causation and argues that they are unacceptable both for the well-known reasons of their anthropomorphism, limited scope, and circularity and because they are subsumed by an alternative "independence" theory of causation, which is free of these difficulties.
After answering relatively minor criticisms of The Inexact and Separate Science of Economics by Geert Reuten and Uskali Mäki, this essay grants their main charge that I could not sensibly defend the way economists assess theories while at the same time criticizing their insistence that economic theories be unified and of maximal scope. I should have said that economists are mistaken in their methods of assessment because they focus on the wrong data and because they unjustifiably insist that only unified (...) theories with wide scope need be considered. (shrink)
This essay defends two theses that jointly establish a link between causal and explanatory asymmetry. The first thesis is that statements specifying facts about effects, unlike statements specifying facts about causes, are not "independently variable". The second thesis is that independent variability among purportedly explanatory factors is a necessary condition on scientific explanations.
This collection brings together the essays of one of the foremost American philosophers of economics. Cumulatively they offer fresh perspectives on foundational questions such as: what sort of science is economics? and how successful can economists be in acquiring knowledge of their subject matter?
Markets are central institutions in societies such as ours, and it seems appropriate to ask whether markets treat individuals justly or unjustly and whether choices individuals make concerning their market behavior are just or unjust. After all, markets influence most important features of our lives from the environment in which we live to the ways in which we find pleasure and fulfillment. Within market life we collectively determine the shape of human existence.<1>.
In this paper I distinguish the kind of ceteris paribus qualifications that often attach to derivative generalizations from those which typically attach to fundamental laws and argue that the latter are typically more tractable. I provide a sketch of a semantics for qualified generalizations and an account of how they may be justified. In addition I argue that legitimate uses of ceteris paribus qualifications must satisfy specific causal conditions.
