Deductive versus inductive reasoning: A closer look at economics

Abstract

Discussions of methodology in economics typically take one of two forms. Either the discussion is a not so veiled justification of the mechanistic model that dominates neoclassical economics, or it is a critique of neoclassical methodology and, often, an attemp to provide a substitute paradigm. Heterodox economists fall into the latter group, critical of the neoclassical paradigm and groping towards an alternative. Unfortunately, heterodox economists, ranging from Marxian to Post Keynesian to Institutional, have been unable to arrive an any consensus over what the alternative paradigm looks like. This article will explore the underlying logical form of neoclassical and institutional economics. As a discipline, philosophy has long concerned itself with reasoning and evidence evaluation, and thus philosophers have much to contribute to an analysis of how economists construct knowledge. This article will explore the underlying logical form of neoclassical and institutional economics through a discussion of the difference between deductive and inductive arguments.