The New Palgrave Dictionary of Economics

2018 Edition
| Editors: Macmillan Publishers Ltd

Experimental Methods in Economics (ii)

  • Vernon L. Smith
Reference work entry
DOI: https://doi.org/10.1057/978-1-349-95189-5_639

Abstract

Historically, the method and subject matter of economics have presupposed that it was a non-experimental (or ‘field observational’) science more like astronomy or meteorology than physics or chemistry. Based on general, introspectively ‘plausible’, assumptions about human preferences, and about the cost and technology based supply response of producers, economists have sought to understand the functioning of economies, using observations generated by economic outcomes realized over time. The data of the astronomer is of this same type, but it would be wrong to conclude that astronomy and economics are methodologically equivalent. There are two important differences between astronomy and economics which help to illuminate some of the methodological problems of economics. First, based upon parallelism (the maintained hypothesis that the same physical laws hold everywhere), astronomy draws on all the relevant theory from classical mechanics and particle physics – theory which has evolved under rigorous laboratory tests. Traditionally, economists have not had an analogous body of tested behavioural principles that have survived controlled experimental tests, and which can be assumed to apply with insignificant error to the microeconomic behaviour that underpins the observable operations of the economy. Analogously, one might have supposed that there would have arisen an important area of common interest between economics and, say, experimental psychology, similar to that between astronomy and physics, but this has only started to develop in recent years.

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Copyright information

© Macmillan Publishers Ltd. 2018

Authors and Affiliations

  • Vernon L. Smith
    • 1
  1. 1.