Philosophical Foundations. Lecture 4. Organization of this lecture. Philosophical Foundations : Positivism Normativism Pragmatism Blending the Philosophies Empiricism in Research The Scientific Approach.
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Different philosophies of research are introduced to illustrate how they contribute to economic research.
Logical positivists do not believe in the scientific validity of prescriptive or descriptive knowledge about values.
Logical positivism holds that theoretical concepts are only valid if theory can be quantified. (too extreme a position for most economists).
Logical positivism is not accepted by many economists, but has had a profound effect on economic thinking and research.
Positivism has also highlighted the importance of objectivity.
However, normativism in economics is not concerned with moral questions of right and wrong (but rather good or bad, which is different).
Objective Normativism refers to the position that the desirability of a result or outcome can be known, based on experience or logic.
Pragmatism became a prominent philosophical force in economics research in the 1920s.
Pragmatism plays the greatest role in problem-solving research, less in subject-matter research and the least in disciplinary research.
The three philosophies – positivism, normativism, and pragmatism – may all be more or less important depending on the type of research.
All types of research are needed – all are relevant (in different cases)
Econometrics originated in the early 1900’s and was augmented tremendously by the advent of electronic computers.
The central scientific methodology (not a single “scientific method”) has the following general steps:
These steps are common to all disciplines
Problem identification is affected by individual as well as group perceptions – ie. what we perceive as a problem.
Laboratory and field sciences tend to see their research process as producing reliable data, devoting attention to proper experimental design to generate statistically valid numbers .
The most direct application of deductive reasoning in the scientific approach is in Step 3, developing hypotheses.
Disciplinary research often involves developing or modifying theories, leading to hypothesized outcomes.
Induction is an empirical process of arriving at new generalities from observations and does not depend on previous knowledge (ie theories).
Induction cannot provide proof of a proposition because we cannot examine all possible evidence. We can only describe the probability of the outcome.
Interpretation of results (step 5) is largely inductive. In examining implications, we often extrapolate from the specific analysis to more general applications.
eg. A representative firm can be used to reason through the expected behavior of an industry. The outcome for the industry can be estimated to be the outcome for the firm times the number of firms.
Deduction provides the necessary implications of premises, which may be general (laws, axioms, principles) or specific (factual); induction examines the validity or applicability of the premises