Commiserations with D. Wade Hands

by Shaun Terry


I argued in my last paper that I thought that Lakatos was trying to save Popper and Kuhn from each other, but it may be more accurate to say that Lakatos thought that Popper was mostly right, except that Kuhn had a point: falsification is not as simple as the refutation process that Popper describes and that some of Kuhn’s ideas about normal science are basically true. Lakatos does not see science as necessarily striking out to constantly make very bold predictions, turning science on its head, just as Kuhn does not, but he also takes issue with Kuhn’s conception of paradigms. Just as Popper’s refutation and bold conjecture do not seem to fit quite right, in Lakatos’s view, misguided also is the idea of a single, dominant paradigm. As such, Lakatos posits that paradigm shifts are not the kinds of revolutions that Kuhn envisions, especially in that Kuhn’s idea that progress is not made through science is one that Lakatos seems to disagree with. Instead, Lakatos suggests that competing Research Programmes keep science from being routinely flipped over.

Having said all that, I think that the criticisms in this week’s readings mostly point to Lakatos having watered down both Popper and Kuhn. With Popper, there was something attractive about the notion that what mostly mattered was the ability to predict, among other things; Popper may have had problems in his conception, but his conception’s shortcomings were made up for in that Popper introduced a new idea that rang true enough that it had to be considered. Kuhn’s response seems to have been more criticized than was Popper’s, but again, it was original and compelling.

Hands points out that the differences between Lakatos and Popper, for economists, was small because Lakatos and Popper agree a good deal on the parts that economists have found most applicable. I will now address some of Hands’s concerns here, especially as they have applied to the work I have done in this class and as they help defend against a particular criticism that I have received.

At the end of the last paper that was returned to me, there was a note which described how I ascribe “normative preferences to economics” that seem to not be there. Toward the end, and in reference to economists, it is said that I “misrepresent them as essentially operating on normative commitments in their explanations as opposed to their policy advice (emphasis Hoover’s).”

Despite having not thought it prudent to use my 1,000 words in any week to fully flesh out my thoughts on these matters, I now recognize that it is unfair (hypocritical, even) for me to operate under assumptions about economics, as they likely require greater explanation in order that I be well understood. This may or may not clear up the criticism, but I now find it appropriate.

I was delighted to find that Hands seems to be making a similar case to the one I have been making, if not one the exact same one. Part of what Kuhn’s theory seems to attempt to resolve is the Duhem-Quine problem. I agree with Hands that this problem is especially relevant in economics. To some degree, assumptions made in economics can be viewed as especially problematic in this light. Hands refers to the question of falsifiability of economics assumptions, but let us use an example to illustrate the point. “People have insatiable wants” is an assumption that does not seem controversial in economics. There are perfectly good, and quite practical reasons for using this assumption and it can seem true enough, but let us look at the problems with it.

First off, it is surely unfalsifiable; falsification would require giving each person (or at least some people) an infinite amount of everything. Whether or not the assumption is true can only be guesswork, to say nothing of how any estimation to this end would likely necessitate inductive methods.

Hands further notes that when we run into inconsistencies in economics, “it is virtually impossible to ‘aim the arrow of modus tollens’ at one particular problematic element of the set auxiliary hypotheses (italics his).” I believe that Kuhn had this in mind when conceiving of paradigms and incommensurability. Maybe people have insatiable wants; or maybe what looks that way is actually something else common to humans; or maybe it is a confluence of factors; or maybe the appearance of insatiable wants is simply a coincidence and the cause of this appearance is different for the different people in whom it appears to hold true, to whatever degree that could be true.

To this point, Hands briefly makes a point early on in this section that I think is rather important: human behavior is “complex.” It might be that some individuals or that people in some cultures express insatiable wants, but if we operate under one assumption of insatiable wants for all people, how can we explain that some people seem to have even more insatiable wants than others do? That is, why do some people seem extra motivated to fulfill these wants and why do some people seem more easily satisfied? Some economists might point to the backward-bending supply curve or labor-leisure models to resolve this, but when economics’s grandfathers conceived of “insatiable wants,” did they really mean that people have an insatiable desire to sit around and meditate or play in flowery meadows or read philosophy of science papers all day? If I am being honest, I am far from convinced that leisure is one of those commodities that was originally intended to be represented as something insatiably wanted, but economics has operated under this assumption for a very long time.

The last point that Hands makes on this subject is about feedback (note: Hands also points out that there is confirmation bias in economics in the form of ease of corroboration and lack of strenuous testing, but I will not be going into that here). Hands says that testing for the relationship between the money supply and the price level “may alter expectations,” leading to possible changes in this relationship. If economists assume that people have “insatiable wants,” then perhaps some people start to behave as though they have insatiable wants——that is, perhaps their behavior is altered by the assumption. At this point, the line between the positive and the normative becomes far less clear. An economist may be describing what is happening, but perhaps the economist is also insidiously and unwittingly telling us how we should behave. In my view, the problem is a bit more complicated than this, though.

I am not convinced that positive and normative can be separated. Economics has tried to distinguish itself from psychology and there are good reasons for that. However, it seems to me that if neuroscience and psychology were advanced enough, then all three of these subjects would rely heavily on one another if not simply consolidate. My point in saying so is that language is important and how we interact with one another is important in understanding how we make choices. If we describe people as “rational,” does the fact that this word can be interpreted in multiple ways matter, especially if changes in attitudes and behavioral changes may result from such a suggestion? As Hands says, human behavior is “complex,” and I think that social psychologists would likely agree.

If an economist tells a policymaker, a businessowner, a parent, or a child that “people have insatiable wants,” that “businesses compete with one another in order to gain greater profits,” or that “GDP growth is good for people, then maybe the policymaker, businessowner, parent, or child believes the economist. Maybe the person being addressed begins to think that this is how people/businesses/governments in contemporary society behave and should behave. When considering the question between is and ought, what is really the difference where economics is concerned? That is not to imply that there is no difference at all, but that we should maybe consider what the relationship between positive economics and perhaps even incidentally normative economics could be.

Hands viewed Lakatos and Popper, as they relate to economics, as being similar. It may be that Lakatos was more right than Popper or Kuhn, but his legacy suffers from being basically unoriginal. If his idea was to simply improve Popper by accounting for some of Kuhn’s gripes, then he needed to do so in a novel way and to appear mostly correct while doing so or else face relative obscurity. Especially in the case of economics, Lakatos seems to have achieved no such thing. One presumes that if we are covering Lakatos in this class, then he likely enjoys some notoriety, but for economists, Lakatos does not seem to have solved much.