Breaking the Rules by Following Laws: The Logic Problems in Science’s and Economics’s Assumptions

by Shaun Terry

Hempel describes the proper use of laws in science. Hausman describes the legitimacy of the ceteris paribus assumption. I think that they are both wrong.

On pg. 299, Hempel asserts that explanation is what science has typically aimed to do, rather than to describe reality. Hempel describes how this explanation could take place. One criterion that he proposes, on pg. 300, is that the explanation should be explanatorily relevant: “The explanatory information adduced affords good grounds for believing that the phenomenon to be explained did, or does, indeed occur.” However, Hempel seems to run into a problem. When he cites Perier’s experiment, Hempel refers to some of the observations as “laws of nature.” What he is saying is that we accept some hypotheses as universally true. There may be some practicality in doing so, but simply because we have observed accuracy in predictions over countless trials does not mean that such predictions are absolutely true and that they will remain so.

On pg. 304, Hempel describes the kind of law he proposes: “It is a statement to the effect that whenever and wherever conditions of a specified kind F occur, then so will, always and without exception, certain conditions of another kind, G.” Just because all that we have observed of something expresses some characteristic does not seem to constitute sufficient ground for us to propose that all such cases do, and will continue to, express that characteristic.

On pgs. 313—315, Hempel describes how some laws are probabilistic, but these still run into the same problem: just because something has happened in some proportion of cases does not justify asserting that the same, or even a similar, proportion will be adhered to in the future. This is induction by induction.

The problem seems to lie in this assumptiveness. On pg. 300, Hempel says, “The explanation fits the phenomenon to be explained into a pattern of uniformities and shows that its occurrence was to be expected, given the specified laws and the pertinent particular circumstances.” Hempel simply seems to assume some uniformity. Why was the phenomenon to be expected? Perhaps it was expected, but to go so far as to say that it was “to be expected” seems to say something about the essential truth. It seems unreasonable for anyone to assume that a human might know anything essential about anything, given that there does not as yet seem to be solid grounds on which to base such a claim.

In the case of economics, the grounds for this kind of thinking seem even shakier. Hausman seems to make the case that ceteris paribus assumptions help us to see causation.

Hausman asserts, on pgs. 168-170, that supply and demand are causes. He may be right, but he does not explain how. In fact, I have yet to see compelling evidence that demonstrates that we can assume so. Essentially, the assumption that supply and demand have causal relationships to price and quantity seems to rely on taking a formidable number of observations and extrapolating: induction. It may be true. To the naked eye, it might seem a little foolish or strange to assume otherwise, but still there seems to be no logical basis on which to make the assumption.

Alternatively, it could be that people buy certain quantities at certain prices, sometimes causing changes to the supply and/or demand. It could be that these things have tended to have happened, but for completely other, unrelated reasons. It could be that there really is a relationship between supply, demand, quantity, and price, but that there is some other underlying force at play which can claim the efficacy. How could we know which it is?

On pgs. 170 and 171, Hausman complains of avoidance of causal language as leading to ambiguity and cumbersomeness. I would argue that he misses the point here. In fact, I would argue that when economists describe factors as “influencing,” it still makes the inductive leap. He follows on pg. 172 by saying that his paper is not generally on causation, but too late; he already said it. Sorry. Building a whole argument on faulty premises is not more convincing by virtue of stating that you do not intend to defend the premises.

This takes us to Hausman’s defense of ceteris paribus. In some sense, I admire the dedication to trying to separate potential causes and to determine the different influences of them. However, despite the apparent consistency with which these models demonstrate these disaggregations of causation, there seem to be too many problems.

First, and to repeat, the problems with discovery of causation seem to remain unconquerable at this time. But further, it seems unreasonable to suggest that we should be able to suss out all of the most significant explanatory factors. It is possible that, for years, decades, or even centuries, we have been consistently neglecting the most important causal factor in some question. This is not the only problem I see, though.

In my papers in this class, I have lately dedicated some time to pointing out the possible problems caused by shifts of realities. To be clear, the ceteris paribus assumption directly confronts this problem. Economics seems to heavily rely on psychologies of people, but people’s tastes and preferences seem to rely a good deal on socializing factors. It seems that whether one lives in a primitive communist hunter-gatherer economy or a modern neoliberal economy could make a difference, just as it might make a difference whether celebrities seem to prefer iPhones over Galaxy Note 7s (R.I.P.).

To put it bluntly, there seem to be problems with science’s use of “laws.” The use of such laws in economics is confounded by apparently more fickle and unpredictable elements of human social behaviors. To state it another way, if in science, the problem with laws is that they seem to demonstrate dogmatic reliance on assumptions that are arrived at through induction, even if they seem undeniably true, economics adds to this the fact that these assumptions are further complicated by the incredibly varied and at times unpredictable human behaviors that we have observed throughout time.


(Unnecessary side note: I’m tempted to think that our seeming obsession with justifying induction, as opposed to simply systematically accounting for it in research products, has to do with the fact that humans are basically inductive in their day-to-day lives)