The New Palgrave Dictionary of Economics

2018 Edition
| Editors: Macmillan Publishers Ltd

Falsificationism

  • Daniel M. Hausman
Reference work entry
DOI: https://doi.org/10.1057/978-1-349-95189-5_2584

Abstract

Many economists would emphasize that scientific claims must be capable of falsification. According to Milton Friedman, an hypothesis ‘is rejected if its predictions are contradicted.… Factual evidence can never “prove” a hypothesis; it can only fail to disprove it…’ (1953, p. 9). These claims echo Karl Popper’s philosophy of science, which, on one interpretation, maintains that what distinguishes scientific theories from theories that are not scientific is that scientific theories are falsifiable. A theory is falsifiable if it is logically inconsistent with some finite set of ‘basic statements’ – that is, true or false reports of observation. A true theory will not be inconsistent with any set of true basic statements, but it will still be falsifiable because it is inconsistent with (or ‘forbids’) some observation reports. In other words, logic and observation can force one to give up falsifiable theories. Popper notes that there is an asymmetry between falsification and verification: basic statements can be logically inconsistent with universal generalizations and can thereby disprove them, but they do not imply that any universal generalizations are true. In his view scientific knowledge grows exclusively from falsification. Verification and even confirmation are impossible.

Keywords

Blaug, M Falsificationism Friedman, M Popper, K Scientific method Theory appraisal Verification 

Many economists would emphasize that scientific claims must be capable of falsification. According to Milton Friedman, an hypothesis ‘is rejected if its predictions are contradicted.… Factual evidence can never “prove” a hypothesis; it can only fail to disprove it…’ (1953, p. 9). These claims echo Karl Popper’s philosophy of science, which, on one interpretation, maintains that what distinguishes scientific theories from theories that are not scientific is that scientific theories are falsifiable. A theory is falsifiable if it is logically inconsistent with some finite set of ‘basic statements’ – that is, true or false reports of observation. A true theory will not be inconsistent with any set of true basic statements, but it will still be falsifiable because it is inconsistent with (or ‘forbids’) some observation reports. In other words, logic and observation can force one to give up falsifiable theories. Popper notes that there is an asymmetry between falsification and verification: basic statements can be logically inconsistent with universal generalizations and can thereby disprove them, but they do not imply that any universal generalizations are true. In his view scientific knowledge grows exclusively from falsification. Verification and even confirmation are impossible.

Although Popper distinguishes theories that are falsifiable from theories that are not falsifiable, he is also distinguishes the ‘critical’ attitudes and norms that characterize scientists – who are willing to test theories harshly and to give up claims that do not pass the test – from the dogmatic attitudes of non-scientists, who seek supporting evidence and explain away apparently disconfirming evidence. It is this latter methodological distinction between science and non-science that is Popper’s more important contribution.

To maintain that scientific theories are falsifiable is problematic, because, with very few exceptions, scientific theories are not testable or falsifiable by themselves. Observing an increase in demand for some commodity after a rise in its price does not falsify the law of demand if there has been a change in tastes, an even greater increase in the price of a close substitute, a general rise in the price level and hence a drop in the real price, or some other complicating factor. To say that an hypothesis ‘is rejected if its predictions are contradicted’ is misleading, because hypotheses rarely have predictions of their own. Significant scientific hypotheses imply predictions only when combined with other statements. So, if one insists that scientific claims have to be testable all by themselves, virtually nothing in science counts as science. On the other hand, if one insists only that, like the law of demand, scientific claims must be falsifiable in combination with other claims, then one cannot rule out even the most blatant pseudo-sciences. When Popper criticizes the scientific credentials of Freudian psychology, he does not maintain that, coupled with other statements, it makes no predictions. His criticism is instead that, when those predictions fail, psychoanalysts never cast blame on Freud’s theory.

What distinguishes sciences from pseudo-sciences is methodology: when amalgams of theories and various auxiliary hypotheses make false predictions, scientists, unlike practitioners of pseudo-science, are willing to modify or even discard their theories. However, it is difficult to specify exactly how willing scientists should be to surrender their theories. Deciding whether observations give one good reason to reject an hypothesis, like deciding whether observations give one good reason to accept an hypothesis, requires weighing alternative explanations of the data. There is no simple asymmetry between falsification and confirmation.

The significance of falsification is methodological rather than logical or linguistic – a question of the norms that should govern science. The message of falsification is that science treats its findings as subject to criticism and revision. How can one make this platitude concrete? As even Popper and his followers have recognized, some dogmatism may be a good thing. Theories are hard to come by and should not be surrendered too easily. What characterizes successful sciences is on the one hand a mixture of attitudes on the part of individual scientists, with some much more critical than others, and on the other hand an institutional structure in which criticism is not too risky to individuals, and successful criticisms are strongly rewarded.

Those commentators on economic methodology who have been most influenced by Popper have generally been critical of economists. Mark Blaug, for example, argues that economists practise ‘innocuous falsificationism’ (1976, pp. 159–60), paying lip service to the importance of falsification while in fact showing little interest in criticism.

See Also

Bibliography

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Copyright information

© Macmillan Publishers Ltd. 2018

Authors and Affiliations

  • Daniel M. Hausman
    • 1
  1. 1.