Economic methodology

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Economic methodology is the study of methods, especially the scientific method, in relation to economics, including principles underlying economic reasoning. [1] In contemporary English, 'methodology' may reference theoretical or systematic aspects of a method (or several methods). Philosophy and economics also takes up methodology at the intersection of the two subjects.

Scientific method mathematical and experimental techniques employed in the natural sciences; more specifically, techniques used in the construction and testing of scientific hypotheses

The scientific method is an empirical method of acquiring knowledge that has characterized the development of science since at least the 17th century. It involves careful observation, applying rigorous skepticism about what is observed, given that cognitive assumptions can distort how one interprets the observation. It involves formulating hypotheses, via induction, based on such observations; experimental and measurement-based testing of deductions drawn from the hypotheses; and refinement of the hypotheses based on the experimental findings. These are principles of the scientific method, as distinguished from a definitive series of steps applicable to all scientific enterprises.

Economics Social science that analyzes the production, distribution, and consumption of goods and services

Economics is the social science that studies the production, distribution, and consumption of goods and services.

Philosophy and economics, also philosophy of economics, studies topics such as rational choice, the appraisal of economic outcomes, institutions and processes, and the ontology of economic phenomena and the possibilities of acquiring knowledge of them.



General methodological issues include similarities and contrasts to the natural sciences and to other social sciences and, in particular, to:

Methodology is the systematic, theoretical analysis of the methods applied to a field of study. It comprises the theoretical analysis of the body of methods and principles associated with a branch of knowledge. Typically, it encompasses concepts such as paradigm, theoretical model, phases and quantitative or qualitative techniques.

Natural science branch of science about the natural world

Natural science is a branch of science concerned with the description, prediction, and understanding of natural phenomena, based on empirical evidence from observation and experimentation. Mechanisms such as peer review and repeatability of findings are used to try to ensure the validity of scientific advances.

Various definitions of economics have been proposed, including the definition of 'economics' as "what economists do".

Methodological individualism is the principle that subjective individual motivation explains social phenomena, rather than class or group dynamics which are illusory or artificial and therefore cannot truly explain market or social phenomena.

In economics, profit maximization is the short run or long run process by which a firm may determine the price, input, and output levels that lead to the greatest profit. Neoclassical economics, currently the mainstream approach to microeconomics, usually models the firm as maximizing profit.

Economic methodology has gone from periodic reflections of economists on method to a distinct research field in economics since the 1970s. In one direction, it has expanded to the boundaries of philosophy, including the relation of economics to the philosophy of science and the theory of knowledge [18] In another direction of philosophy and economics, additional subjects are treated including decision theory and ethics. [19]

Philosophy of science is a sub-field of philosophy concerned with the foundations, methods, and implications of science. The central questions of this study concern what qualifies as science, the reliability of scientific theories, and the ultimate purpose of science. This discipline overlaps with metaphysics, ontology, and epistemology, for example, when it explores the relationship between science and truth.

Epistemology A branch of philosophy concerned with the nature and scope of knowledge

Epistemology is the branch of philosophy concerned with the theory of knowledge.

Decision theory is the study of the reasoning underlying an agent's choices against nature. Decision theory is where results depends on another and can be broken into two branches: normative decision theory, which gives advice on how to make the best decisions given a set of uncertain beliefs and a set of values, and descriptive decision theory which analyzes how existing, possibly irrational agents actually make decisions.

See also

The methodology of econometrics is the study of the range of differing approaches to undertaking econometric analysis.


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