Chapter 1: Introduction

Questions for Review and Discussion (pp.13)

1, 2, 4, 9

Primary Aim of Text Chart the development of

economic thought over time

Demonstrate how past mainstream thought has contributed to the scope and content of modern economics

Components of Economic Thought Vision – broad perception

of an economic system Theory – formal models

that capture the vision of economic systems

Historical Mechanism to deal with Scarcity1. Brute force2. Tradition3. Institutional authority4. Markets

Focus of Microeconomics Focus on stability and

growth of aggregate measures of an economic system

Sociology of Economic Knowledge1. Relativist school

Most influential prior to 1950’s

Considers the historical, economic, social and political forces that shape the content of emerging theories

2. Absolutist (Whig) School Progress of theory

depends on the discovery and explanation of unsolved problems or paradoxes by professional economists reacting to intellectual developments within the profession

Heterodox Approaches Read pp. 5 to 10 on your

own

Positive Economics What is Focus on impersonal

forces that govern economic activity

David Ricardo

Normative Economics What should be Integrates economic

theory with ethics Welfare economics

Art of Economics Concerned with public

policies Marshall

Methods of Empirical Reasoning Induction – Proceeds from

statistical information of people, places,

and ‘events’ (or activities) to

general concepts Deduction – Applies clear

and distinct theories to practical “events”

Abductive – Mix of two approaches-- Combines

history,institutions and empirical study to gain insights into complex systems where definitive theories are beyond ones grasp

-- Heuristics

Appendix: Evolution of Methodological Thought (pp. 17-21)

Logical Positivism Provided a scientific

method with philosophical foundations

Originated with the Vienna Circle

Scientists develop a deductive structure (a logical theory) that leads to empirically testable propositions

Dominant philosophy in the 1920’s and 1930’s

The purpose of science is to establish a “truth”

Popper’s Falsification Empirical tests do not

establish the truth of a theory, only its falsity

An experiment that yields the predicted result indicates that the theory is not false

Scientific Paradigms Thomas Kuhn A given approach and

body of knowledge is built into a researchers analysis

“Normal Science” seeks to solve puzzles and paradoxes posed by the framework of the dominant paradigm

Change occurs by revolution

Research Programs Imre Lakatos Existing theory may not

embody the “truth”There are

competing research programs, each involve:

1. Analyzing and attempting to falsify a set of data

2. Unquestioned acceptance of a set of hard-core logical postulates

Rhetorical Approach to Methodology Emphasizes the

persuasiveness of language

Sociological Approach to Methodology Focus on social and

institutional constraints influencing the acceptability of a theory

Method of Abduction An eclectic approach Researchers never know

with certainty whether theory is true or false

They accept the most promising ideas as tentatively true working hypotheses