The New Palgrave Dictionary of Economics

2018 Edition
| Editors: Macmillan Publishers Ltd


  • Daniel M. Hausman
Reference work entry


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.


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

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© Macmillan Publishers Ltd. 2018

Authors and Affiliations

  • Daniel M. Hausman
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