By Don Ross
What is economics fundamentally about? Some say 'money'. But that only applies, at a stretch, to macroeconomics. Others say 'incentivised choices'. Through a review of the history and methodology of economics, with special concentration on the past 60 years, the book shows why the second answer is more accurate.
But this leads straight into another problem: psychologists study choices too. So how is economics different from psychology? Philosophy of Economics explains this, by showing how economics is really about groups or populations of people. In clearly distinguishing economics from psychology, the book criticizes the current popular wave of behavioural economics, showing how many studies under that label confuse economics with psychology.
But if economics is about structures of group response, then how is it different from sociology? The book shows how and why economics and sociology are currently converging, perhaps ultimately to form a single unified discipline fed by two distinct historical tributaries.
In Philosophy of Economics Ross offers his own provocative interpretation of the value of economics in science and public policy, giving a unique perspective from a world authority.
John B. Davis on Erasmus Journal for Philosophy and Economics wrote:
"In this book, Don Ross offers his philosophy of economics, not a survey of an area of contemporary philosophy that is conventionally referred to as philosophy of economics. [...] My suggestion for a (perhaps too long) subtitle is ‘The proper place of economics in the ongoing construction of the scientific worldview’. This subtitle would have indicated the orientation of the whole book. [...] What are the types of structured interactions for which standard economic analysis is sound? Ross’s answer in one word is “markets”. Unfortunately, the scope of this concept in Ross’s writing is not clear. [...] This ambiguity on the concept of markets has repercussions on the overall coherence of the book. [...] This book is a challenging and rewarding read. I was initially worried by the reification of disciplines implicit in Ross’s main question. To me, economics, like all other disciplines, is a diverse bundle of research with vague boundaries. Asking what it is “fundamentally about” is thus close to foolish. But the book has much to offer even to those who are not thrilled by its main question. Beyond the talk about disciplines, it offers a sophisticated defense of a general approach to the study of social phenomena."
According to Ross " the most important question for the philosophy of economics is:
Are the principles of normative decision theory, or at least those principles most relevant to identification of relative opportunity costs and opportunity values, more closely approximated by individual people making choices in relative isolation, or by groups of people making choices in certain sorts of institutional contexts? (pp. 36, 186).
His answer is the latter, and thus he emphasizes that one of the ‘main themes’ of his book is that we should reject the idea “that all important properties [economics studies] ‘boil down to’ properties of individual people” (p. 2) - the standard micro foundations project. Indeed he rejects methodological individualism as a ‘dogma’ that economists would be better off abandoning (p. 20, see 114ff.). So what is his conception of economic science that underlies these views? Ross calls it neo-Samuelsonianism.
[...] Ross brings a well-motivated philosophy of science critique of analytic philosophy to the philosophy of economics, and he uses [the philosopher Daniel] Dennett persuasively to undermine individualist explanations in economics and to cast doubt on what psychology offers to economics.
Less clear is how neo-Samuelsonian economics survives."
Table of Contents
- Philosophy of Economics as Philosophy of Science
- Economics and Its Neighbors before 1980
- The Expansion of the Economic Toolbox
- How Economics and Psychology Differ
- Economics as a Social Science
About Don Ross
Don Ross is Professor of Economics and Dean of Commerce at the University of Cape Town, South Africa, and Program Director for Methodology in the Center for Economic Analysis of Risk at Georgia State University, USA. He previously lectured at the University of Alabama at Birmingham and the University of Ottawa. He is the author of many previous articles and books on economic methodology, philosophy of science, and experimental studies of risky choice.