A defence of absurd theories in economics
Authors:
Nordberg, Morten and Ole Røgeberg
Year:
2005
Reference:
Journal of Economic Methodology
Vol 12, no 4, pp 543-62Summary
Theories that involve plainly false and even bizarre assumptions are argued to have an important role in bundling empirical facts in a way that allows these to be understood, handled and used as modules in the construction of mechanisms by economists with human cognitive limits. Absurd theories are subcomponents used in a valid explanatory strategy as long as the mechanisms only derive the implications of the facts summarised. This provides a defence and explanation of many economic theories, but also imposes hard limits on such theorising.
JEL:
B41, D00
Keywords:
As-if theory, economic methodology, welfare economics
Project:
Oppdragsgiver: Norges forskningsrådOppdragsgivers prosjektnr.:
Frisch prosjekt: 4101 - Economics of health
Contact:
morten.nordberg@frisch.uio.no
Financing:
The Research Council of Norway