PHILOSOPHY IN ECONOMICS

PHILOSOPHY IN ECONOMICS

THE UNIVERSITY OF WESTERN ONTARIO SERIES IN PHILOSOPHY OF SCIENCE A SERIES OF BOOKS IN PHILOSOPHY OF SCIENCE, METHODOLOGY, EPISTEMOLOGY, LOGIC, HISTORY OF SCIENCE, AND RELATED FIELDS Managing Editor ROBERT E. BUTTS Department oj Philosophy, The University of Western Ontario, Canada Editorial Board JEFFREY BUB, The University of Western Ontario L. JONATHAN COHEN, Queen's College, Oxford WILLIAM DEMOPOULOS, The University of Western Ontario WILLIAM HARPER, The University of Western Ontario JAAKKO HINTIKKA CLIFFORD A. HOOKER, University of Newcastle HENRY E. KYBURG, JR., University of Rochester AUSONIO MARRAS, The University of Western Ontario JURGEN MITTELSTRASS, University of Konstanz JOHN M. NICHOLAS, The University of Western Ontario GLENN A. PEARCE, The University of Western Ontario BAS C. V AN FRAAS SEN, The University of Toronto & University of Southern California VOLUME 16

PHILOSOPHY IN ECONOMICS Papers Deriving from and Related to a Workshop on Testability and Explanation in Economics held at Virginia Polytechnic Institute and State University, 1979 Edited by JOSEPH C. PITT Department of Philosophy and Religion Virginia Polytechnic Institute and State University Blacksburg, Virginia D. REIDEL PUBLISHING COMPANY DORDRECHT: HOLLAND / BOSTON: U.S.A. LONDON:ENGLAND

Library of Congress Cataloging in Publication Data \Vorkshop on Testability and Explanation in Economics, Virginia Polytechnic Institute and State University, 1979. Philosophy in economics. (The University of Western Ontario series in philosophy of science; v. 16) Includes bibliographies and index. 1. Economics-Congresses. 2. Economics-Philosophy- Congresses. 3. Economics-Methodology-Congresses. I. Pitt, Joseph C. II. Title. III. Series: University of Western Ontario. University of Western Ontario series in philosophy of science; v. 16. HB21.W67 1979 330'.01 80-27996 ISBN-13: 978-94-009-8396-0 e-isbn-13: 978-94-009-8394-6 001: 10.1007/978-94-009-8394-6 Published by D. Reidel Publishing Company, P.O. Box 17,3300 AA Dordrecht, Holland Sold and distributed in the U.S.A. and Canada by Kluwer Boston Inc., 190 Old Derby Street, Hingham, MA 02043, U.S.A. In all other countries, sold and distributed by Kluwer Academic Publishers Group P.O. Box 322, 3300 AH Dordrecht, Holland D. Reidel Publishing Company is a member of the Kluwer Group All Rights Reserved Copyright 1981 by D. Reidel Publishing Company, Dordrecht, Holland Softcover reprint of the hardcover I st edition 1981 No part of the material protected by this copyright notice may be reproduced or utilized in any form or by any means, electronic or mechanical, including photocopying, recording or by any information storage and retrieval system, without written permission from the copyright owner

PREFACE The essays in this volume are the result of a workshop held at Virginia Polytechnic Institute and State University in April, 1979. The assembled group was diverse, comprised of philosophers, economists, and statisticians. But it was not the complete group on which we had initially planned. Richard Rudner was in France on sabbatical and was unable to fly back for the occasion. His untimely death the following summer saddened us all, for we lost not just a colleague but a friend. This book is dedicated to him out of the spirit of friendship and in appreciation for the ground breaking work he did in the philosophy of the social sciences. In addition to the participants, a number of people worked very hard to make our gathering possible. We are especially indebted to Dean Henry Bauer, Dean Ernie Stout and Dean John Ballweg of the College of Arts and Sciences at Virginia Tech for their good will and support, both moral and substantive. We would also like to thank Professor Guy Hammond, Head, Department of Philosophy and Religion, for his council and assistance. Our special thanks to Jeanne Keister and Betty Davis for their patience with unending typing and reservations, and finally to Barbara Kersey, always at hand, ever helpful. Without them nothing would have transpired. The final versions of the papers would not have been possible without the enormous cooperation of the authors themselves. With good spirit and incredible speed they not only commented on each other's work, but responded cheerfully to my constant requests for instant productivity. Blacksburg, Virginia June, 1980 J.C.P.

T ABLE OF CONTENTS PREFACE JOSEPH C. PITT / Introduction 1 EDWARD J. GREEN / On the Role of Fundamental Theory in Positive Economics 5 DANIEL M. HAUSMAN I Are General Equilibrium Theories Explanatory? 17 R. J. WOLFSON / New Consumer Theory and the Relations Between Goods 33 ALEXANDER ROSENBERG / A Skeptical History of Microeconomic Theory 47 STEVEN STRASNICK / Neo-Utilitarian Ethics and the Ordinal Representation Assumption 63 E. F. McCLENNEN / Constitutional Choice: Rawls versus Harsanyi 93 RA YMOND DACEY I Some Implications of 'Theory Absorption' for Economic Theory and the Economics of Information 111 LOUIS L. WILDE I On the Use of Laboratory Experiments in Economics 137 I. J. GOOD I Some Logic and History of Hypothesis Testing 149 DEBORAH MAYO I Testing Statistical Testing 175 INDEX 205 V

Dedicated to Richard R. Rudner