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Models and Fictions in (Micro-)Economics

Wichardt, Philipp LU (2014) In Working Paper / Department of Economics, School of Economics and Management, Lund University
Abstract
How can an argument that is based on assumptions known to be false deliver any insightful conclusions let alone be used for policy recommendations? Over the years, a variety of concerns regarding (micro-)economic modelling and its relevance for real life have been expressed along these lines. Adding to this methodological discussion, I take seriously the recurrent comparison of economic models with literary fiction (fables, metaphors, parables,...) and argue that many of the concerns expressed can be alleviated in a coherent picture if one adopts the fiction view of models proposed by Frigg (2010a,b). In particular, I argue how adopting such a view not only opens a way for meaningful comparisons of economic models with reality but also... (More)
How can an argument that is based on assumptions known to be false deliver any insightful conclusions let alone be used for policy recommendations? Over the years, a variety of concerns regarding (micro-)economic modelling and its relevance for real life have been expressed along these lines. Adding to this methodological discussion, I take seriously the recurrent comparison of economic models with literary fiction (fables, metaphors, parables,...) and argue that many of the concerns expressed can be alleviated in a coherent picture if one adopts the fiction view of models proposed by Frigg (2010a,b). In particular, I argue how adopting such a view not only opens a way for meaningful comparisons of economic models with reality but also relieves the pressure on assumptions to be empirically verifiable. Moreover, the argument suggests a distinctive role for strong mathematical theories such as expected utility theory (setting limits to the fictional world to be imagined), the often extensive story telling in economic modelling (adapting the model to a context and suggesting comparisons with "reality") as well as for empirical studies putting economic modelling to the test (exploring properties of the real world and how they relate to properties of the fictional model-world). (Less)
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author
organization
publishing date
type
Working Paper
publication status
published
subject
keywords
Fictions, Modelling, Microeconomics, Story Telling
in
Working Paper / Department of Economics, School of Economics and Management, Lund University
issue
31
publisher
Department of Economics, Lund Universtiy
language
English
LU publication?
yes
id
0dc8c7f6-bf1e-4578-b26e-36d18fa8262d (old id 4616657)
alternative location
http://swopec.hhs.se/lunewp/abs/lunewp2014_031.htm
date added to LUP
2014-09-02 15:30:30
date last changed
2016-04-16 09:29:41
@misc{0dc8c7f6-bf1e-4578-b26e-36d18fa8262d,
  abstract     = {How can an argument that is based on assumptions known to be false deliver any insightful conclusions let alone be used for policy recommendations? Over the years, a variety of concerns regarding (micro-)economic modelling and its relevance for real life have been expressed along these lines. Adding to this methodological discussion, I take seriously the recurrent comparison of economic models with literary fiction (fables, metaphors, parables,...) and argue that many of the concerns expressed can be alleviated in a coherent picture if one adopts the fiction view of models proposed by Frigg (2010a,b). In particular, I argue how adopting such a view not only opens a way for meaningful comparisons of economic models with reality but also relieves the pressure on assumptions to be empirically verifiable. Moreover, the argument suggests a distinctive role for strong mathematical theories such as expected utility theory (setting limits to the fictional world to be imagined), the often extensive story telling in economic modelling (adapting the model to a context and suggesting comparisons with "reality") as well as for empirical studies putting economic modelling to the test (exploring properties of the real world and how they relate to properties of the fictional model-world).},
  author       = {Wichardt, Philipp},
  keyword      = {Fictions,Modelling,Microeconomics,Story Telling},
  language     = {eng},
  note         = {Working Paper},
  number       = {31},
  publisher    = {Department of Economics, Lund Universtiy},
  series       = {Working Paper / Department of Economics, School of Economics and Management, Lund University},
  title        = {Models and Fictions in (Micro-)Economics},
  year         = {2014},
}