Apparent micro-realism in mainstream orthodox economics

Abstract

As reiterated for a long, mainstream economics mainly relies upon a set of unrealistic axioms and deductive assumptions, which, nevertheless, are what underpins its core postulates. They are unnecessarily unrealistic assumptions, mainly because the empirical evidence for contrasting them is as overwhelming as old. Even the claim for (returning to) realism in economics is already old within part of the profession. However, most mainstream academics tend to consider that their research works have in fact empirical contents insofar as they usually start by considering simplified cases, situations, or descriptions that allude to some real economic facet; this, in the way of specificities to be introduced into the standard General Equilibrium model. This seeming paradox is discussed in this paper, and as a result, it is argued that there do is a predominance of a research programme in mainstream orthodox economics (modern neoclassical “economic theory,” plus “econometrics”) that is mainly characterized, more than by micro-empirical precisions, by a sort of abstract micro empiricism. It is also argued that the outcomes brought about by such a “mode of research production” (contributions) do not appear significantly relevant in terms of the quantum of knowledge provided about the functioning and problems of our economies.

Keywords:

• Deductivism
• empiricism
• empirical evidence
• hypotheses testing
• Mainstream Orthodox economics
• realism

JEL:

• A11
• B40
• B50

Notes

1 An account of their contributions and arguments may be seen in Vergés 2020, 252–254.

2 Vergés 2020, 254

3 See sample description in the Appendix.

4 Papers that may be considered as ‘basically economic-theory mathematical-modelling oriented’ (using their numbering in the Appendix): I.1, I.4, I.8, I.10; II.1, II.3, II.4, II.7, II.8, II.10; total: 11 articles.

Papers that may be considered as of a ‘predominantly econometric content’: I.2, I.3, I.5, I.8, I.10; II.2, II.5, II.6, II.9; total: 9 articles.

5 Article I.10

6 Article II.7

7 Article II.3

8 Article I.5

9 Articles I.1 and II.1

10 Articles I.10 and II.3

11 Article I.2

12 Article I.7

13 Articles I.9, II.6, and II.9

14 Article II.6

15 Article II.2

16 Articles I.2, I.3, I.6, II.5, and II.6

17 As a result of this 1996 research, the authors found that 70% of the 182 econometrics papers published in the American Economic Review, AER, during the 1980s “… flatly mistook statistical significance for economic significance, further, again about 70% [of the former; i.e. 49% of the 182] failed to report even the magnitudes of influence between the economic variables they investigated” (Zilian and McCoskey 2004, 331–2). In this latter, subsequent, study of 137 econometric papers published in the AER during the following decade, the 1990s, the respective percentages were even something ‘worse’: 82% and, 70%; that is: 57,4% of the papers did even report on the values obtained for the parameters (same 2004 reference, p. 332).

Additional information

Notes on contributors

Joaquim Vergés-Jaime

Joaquim Vergés-Jaime is Emeritus Professor of Financial Economics, at Universitat Autònoma de Barcelona, Spain.