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Summary Economic Methodology - ENDTERM UVA EBE (Grade: 9.5)

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This document is a summary of everything you need to know for the course Economic Methodology (course code: 6012B0454Y) at the University of Amsterdam. This course is taught in the second year of the bachelor Economics and Business Economics and is taught by Dr. Dirk Damsma. In this course chapter 1 up till and including chapter 7 of the book 'Economic Methodology. Understanding Economics as a Science' by Boumans and Davis (ISBN: 5558) is used. In this document I have summarized all the lectures by Damsma, all the knowledge clips by Damsma and all the knowledge clips by Vermeylen. This corresponds to chapter 1 up till and including chapter 7 of the book.

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Lecture 1: The received view
Science is the result of scientific research: explanations, descriptions, measurements, predictions or recommendations.
Theories try to make sense of a reality; science studies study those theories.

• Demarcation = the process by which we distinguish between science and non-science using some criterion. the action
of fixing the boundary or limits of something.
• Ontology = philosophical discussion about the nature of reality → influences your world view and thus the product of
your science → in mainstream economics: the individual is the essence of society (rather than vice versa).
• Epistemology = philosophical study of the nature of knowledge → where to start your research.
• Sociology of science = approach to scientists that tries not to take any ontological or epistemological positions → go
about research as is you’re an anthropologist and find out about their beliefs.
• Positive science = science that is focused on describing/explaining/predicting phenomena → facts.
• Normative science = science that is focused on prescriptions and recommendations → norms.

There was general enthusiasm for the German unification in Austria, which was something Hitler was also after. The
publication of Mein Kampf gave a defense for their ideals and thus was embraced. Hitler’s ideas were taught at universities.
This led to a very difficult climate for the Jewish professors. There came a Jewish reply: the wissenschaftliche
Weltauffassung (Scientific World View). This world view tried to give a radical foundation for science and tried to stop
antisemitism. The radical foundation they gave was for scientists to stick to the facts, to the things you can observe. Der
Wiener Kreis (The Vienna Circle) formulated the idea that science should stick to the facts and that those facts should be
checkable through observation.

Statements/propositions can be…
• Synthetic a posteriori = empirically verifiable: ascertaining truth by observation → verifiable with sense data →
meaningful
• Analytic = logically verifiable: ascertaining truth by logical analysis → true by definition or logic → meaningful
• Synthetic a priori = statement about the world that cannot be evaluated by observations or logic in the world and that
is not verifiable with sense data (= observations using your five senses). → not meaningful
Synthetic statements are statements that say something about the world.

The two foundations (demarcation criterion) of Logical Empiricism/Positivism / The Received View:
1. Logical analysis → one should construct a theory and test for inconsistencies
2. Empiricism: Observation and Measurement → check if consistent theory holds in the world (operationalizations
needed).
a. Statement has to be empirically verifiable
b. Statement has been verified → observed in the world.
The demarcation criterion for the Logical Positivists was: scientific statements can be independently verified using logic
and/or observation. Science only involves analytic and synthetic a posteriori propositions, and not synthetic a priori
propositions. The logical positivists were anti-metaphysical (= the branch of philosophy that thinks about things that we
can't observe in the world).

Operationalization = deconstruction of a theoretical concept in its observational counterparts/categories (using
correspondence rules)
Correspondence rule: Theoretical Concept = Definition(OC1, OC2, OC3, OC4). Where OC = observable category.
However, often a theoretical concept can be measured in a lot of different ways! → impossible to find unrestricted
generalizations.
Operationalism = if a theoretical concept is measured in different ways, it is in fact not the same concept.
Often, we want to make statements about the world using terminology / entities that are theoretical and not directly
observable. If we want to say something scientific about them, we have to make them observable by agreeing on a
correspondence rule (= definition of the term that puts it into observable categories).

Logical positivists were not interested in the context of discovery (= the way in which a theory is found) but were interested
in the context of justification (= the verification of the truth of a theory; the way how synthetic statements are verified).

The logical positivists’ ideas for a proper structure for scientific explanations and predictions is summarized in the
Deductive Nomological Model/Explanation, constructed by Carl Hempel. It was the standard model for explanations that
logical positivists used.
Explanans (1) Lawlike proposition ∀x[A(x) → B(x)]
(2) Conditions A(a)
Explanandum (3) Phenomenon to explain B(a)


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