| Lasse Lien |
Some things just cannot be ignored. A prime example is Friedman’s 1953 essay “The Methodology of Positive Economics.” As most O&M readers will know Friedman’s key claim is that a theory should be judged by its predictive accuracy, not the realism of its assumptions. On the contrary, a theory that makes dramatic (i.e., unrealistic) simplifying assumptions and still generates good predictive results is considered a better theory than a more complex (i.e., realistic) theory with the same predictive performance. Few texts, and surely no other text on economic methodology, is loved, hated, and cited by so many. In much of mainstream economics Friedman’s position — or some version thereof — is routinely relied upon. For example, imagine defending game theory on the realism of its assumptions.
In 2003, on the 50 year anniversary of its publication, a conference was held at the Erasmus University in Rotterdam where the legacy of this paper was discussed. In 2009 a book was published containing a collection of papers from this conference, edited by Uskali Mäki. A link to this book can be found here, and a recently published (harsh) review of the book can be found here. Note that the book review makes interesting reading even if you do not intend to read the book (but have read the original essay).
If this is your cup of tea, you might also like this remarkable paper.