Symposium on Marshall's Tendencies: 2 Well-grounded theory, and aggregation

Franklin M. Fisher

Economics and Philosophy, 2002, vol. 18, issue 1, 17-20

Abstract: In Marshall's Tendencies (Sutton, 2000), John Sutton poses some fairly deep questions for economists, especially for empirical work. In particular, when (if ever) is it safe to behave as though the ‘standard paradigm’ applies? In that paradigm, we are attempting to extract and estimate the ‘true’ model from the data and are only kept from doing so because, while economic analysis captures the main ‘tendencies’, there are many small influences that we cannot exactly take into account. That paradigm, which Sutton traces to an analogy of Marshall's likening economic predictions to predictions of the tides, leads to the econometric estimation of economic relationships, taking statistical account of the unincluded small influences by placing them in a random disturbance term. Sutton states (p. 5), ‘if Marshall's analogy were valid, we would have seen spectacular progress in economics over the past fifty years’.

Date: 2002
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