The Methodology of Positive Economics

Milton Friedman’s methodological approach to positive economics starts with the assertion that the ultimate goal of positive economics is to come up with hypotheses. He emphasizes that the hypothesis must be subdivided so that value is achieved and identification of a particular assumption is arrived at. Friedman (1966, pp8) asserts that the failure to separate the hypotheses will lead to a situation where some assumptions cannot be identified.  However, he also claims that the validity of a hypothesis does not guarantee it to be chosen from a group of hypotheses because it could be misleading in its own right. According to Friedman, the theory and hypothesis in positive economics is to be judged basing on its ability to predict, as this is the goal of this branch of economics. Friedman draws various views on the assumptions made under positive economics. Firstly, he holds that the validity of an assumption is paramount so long as it indicates some level of prediction and should be accepted.  Pheby 1988 (pp104) asserts that the failure to control an experiment on an assumption should not be its end, but one should consider whether it gives sound predictions. He concludes by claiming that the level of realism of an assumption does not matter because it does not affect its assessment of situations.

Friedman’s approach faced many criticisms due to its recognition of unrealistic assumptions. Critics claim that an unrealistic assumption cannot guarantee a valid theory. Therefore, they say that the theory is inadequate in its explanation of matters relating to unrealistic assumptions. Moreover, critics claim that assumptions can only hold if they have a measuring rode that establishes their validity.  Blaug reports that the definition of the goal of science also faced criticism on the grounds of being unrealistic. This is because it would not be necessary to measure validity of the assumptions given the goal. The critics also claim that the unrealistic nature of this approach renders it impracticable in a real world where there are real happenings.

Karl Popper’s falsification approach starts with the assertion that falsification does not mean something is false. The approach is focuses on the view that an experiment produces results that are at variance to it. Popper clarifies that falsification is the separating factor between science and non-science. Under the approach, Popper shows that science grows through processes of refutations and conjectures. Hausman intimates that  theories and hypotheses are used as solutions to the problems at hand. He emphasizes that these theories should first be put to test before they are used as solutions. Popper holds that the more falsifiable experiment has more value because it gives more information concerning a given issue.  According to Blaug, this theory holds that everything should be subjected to criticism before being considered. Lastly, Popper asserts that falsification is a distinct branch of criticism, and every experiment and assumption must be subjected to criticism.

The approach has faced strong criticism from different quarters.  Popper’s claim that criticizability in contrast to falsification yields rationality has been criticized because it raises controversies that cannot be proven. Hausman (2008, pp140) reports that critics claim that it is difficult to group ideas as scientific basing on his approach because some experiments do not yield the required results.

The two theories have weaknesses but Popper’s approach would be somehow appropriate. I would choose his approach because of its provision for testability of situations. This would be more realistic because it facilitates the picking of an assumption that has been verified. Pheby intimates that his approach provides for comparisons before a final decision on various assumptions is reached upon.

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