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    Friedman - 2008 - The Methodology or Positive Economics

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    Alejandro Sierra

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    ‘The Methodology of Positive Economics Milton Friedman No Freda (1912-200) ws ot in Bray Now Yn, ad este hie PAD in economies fm Catia Unity Hetrgi sth Unensy of Mi esd then fc nay yeas the lest of Chzga Aer 197, we Solr Reelin a the Hower astton Sant Cefn Fan ithe known riser nant theory anor hitconsno ec enespie dine ety Mito rns war wade he Rebel Pisin comers in19%e Theron ey whichis repttedinenity.e nenta Wook on coo ehadaogy a hice. ln his admirable book on The Serpe and Matha of Pca Exmamy Jon Neve Keyes ditingushes among "a postive selene. «body of systemtin knowlege concerning what isa normative o relative ‘eine... ()] 4 body of sstematiaed knowledge dicing rtera of what ‘oughta be... jan at. sytem of les forthe attainment ofa ven ‘nds comments that confusion between them i eommon and has been the source of many mischievous errors: and urge the importance of" we ‘ognizng a distinc postive sence of politcal economy” This[essy|isconcermed primary wit certain methodological problems ‘atari in connretng the “disint postive cence” Keyes ald for — ‘in particular, he probler how to decid whether a suggested hypothsisar ‘theory should be tentatively accepted a part ofthe "body of eyteratized [hiv Beorpotd bodily in is aie without wc ence mot of my ‘atone of CteprayHane a (8 ale) Cig Tam nit rh Body. Artr trs n GargsSp p Tom Ey tie Banani by Mla Rtn, hcg Uney of Chg fs Cpigh'© 9 ye nef chon eps Fone 6 Mion Feit knowlege concerning what is” Bt the confi Keynes laments itll so ifeand go much of hindrance othe scogrition that economics can brand in pati postive science tht it sem well o preface the main body of the paper wth fw remarks about the relation between pesitve nd normative economies 1. The Relation between Positive and Normative Economies ee eee ee eee! eee ee ean ae ‘Te Meola of Pstve Bees 7 than athe, prediction that ust be based implicitly or explicly on ostve economics. There is wa, af cout oneto-one relation been policy conchsions andthe concasons of posine economic thee wore there would be noseparate normative scence To individuals nay agrecon ‘the consequences of particu piece of legislation, One muy rep then ‘sdesiaibleon balance ad so fvor the legion the the asundesable a 0 oppose the leglation venta the agen, owes, that crsetyin the Western weld and ‘pecan United States dierenceraboutezanomic policy smongalie interested citizens derive predominantly fom diferent rican out the economic consequences of taking scion ~ diferenes that in pine, le canbe eiminated by the progres of pose economia ~ rh than fom fandamentl difrences in basi aie cifeences about which me an limately only fight. An obvious and not unimportant example ‘ninimum:-wage legion, Underneath the wer of argument ofeed for and agains such leiation there i a underyng comenaus on the ‘bjstiveof achieving "ving wage fral owe the ambiguus paseo ‘common in such elicussions, The difference f opinion is lel ground ‘on an implicit or exlici diference in prection about te ieay of this particu means in furthering the agrecd-on end. Popoaents bere (red) that ea minimum wags dannish poverty by raising the wages ot those rectvng les than the miniznam wage a well a of some rece ing more than the minimum wage without ay conteelacing increase in the numberof people entirely unemployed or employed less alent ‘grouly than they otherwise would be, Oppnents believe (pred) that eal nimi wages increase poverty by increasing the numer of people who are unemployed or employed les advantageously amd ht this more thanofsetsany favorable effecton the wagero the who remain employe. “Agreement about the economic consequences ofthe legislation might ot Produce complete agreement abouts desirably, fr dfeences might ‘emain about its politcal or socal consequence, bts ienagrctnat on jest it would certainly go long way toward producngeonacaas ‘lose elated erences in postive analysis undel cvergent views bout the appropriate role and place of trae-unions athe desieilty of iret price and wage conte and of tif. Diferen predictions about the importance of so-called “economies of cl” accourt ery largely for Alivergent views about the desirability or neces of detailed poveraient ‘regulation of industry ad even of scilis athe than pvt ets, Ane this tit could be extended indefinitely OF course, my jodgment thet ‘he majo dteences shout economic poliy inthe Wester word ace of 1 Mion Finan this kind i ite a positive” statement co be accepted ar rected on the Isis empiri evidence, Tethis judgments vai itmeans that consenuson eoret” economic Policy depends mueh ess on the progres of orate economics pret than onthe progsss of postive economic ing concusons at re, and deere tobe, widely accepted. It means sls tata major season for singising postive economics sharply from normative economics is precisely te contribution that can thereby be made to agicement about Poli 1, Postve Economics ‘The ultimate goal ofa postive aience edhe development ofa “thory" of "hypothesis" that yd aid and meaning (not iti) peditons bout phenomena nt yet observed, Such theory sn general complex ntermintueoftwo elements In par tsa"nguagedeigoed io promone systematic and organized methods of easoning” In paz iba of substantive hypotheses designed to abstract essential festures of complex rely ‘Viewed a a Inguage, theory has no substantive content is set of| {sutologies ts funtion to serve asa flingsytem for orgmnizingempitesl ‘material and facittng our understanding oft and the criteria by which 'vinobe judged are hose appropriate to ling ster, Ar the categories sleaty and preci defined? Are they exhaunive? Do we know where to file each individal iter, ois thre comsiderable ambi Is the system ‘of headings and subheadings so designed that we ca uch find an tem ‘ve want, or mas we hunt rom place o pact Are the tems we hal wat to consider jointly fed together? Does the filing sem avoid elaborate cross-reference? ‘The answers to these questions depen parton lg partly on ‘ual, considerations. The canons of formal log sone an show whether « pticular language i complete and consistent, that i, whether propo: sitions i the lnguage are “ight” 0 "weong” Factual evidence ale an show whether the categories ofthe anata fling sate havea mean ing empirical counterpart, that, whether they are wel nanan «particular cas of concrete problems® The sinple example of “apply” and “demand” illastratesboth hispoint and the preceding list of enaloical ‘questions: Viewed a lements of the language of economic theory, these ne the two roar categories into which ators afetng the relative prices of products or fxtors of production ae ease. The usefulness ofthe The Methodlegy of Poste Exons ws Aicotony depends on he eal penrazton hat an enumeton ef the ves cing dead ny problem acd ofthe fe ect. ing up ol ed vos that onan fees coon? Now ‘Rng ad lor marks teal tt ora commer good: Inmucha nari thee tracer and ip dic Between the Conon ur hat can be gated as eran the prod and those Att can be eared ae aupying i Trea mich dob whether 2 pater cor shouldbe aiid ae afecting splot one and, Sr dma on the oer ad here som much neces fr cone tng rm elles roy efeenrs) Betvec eo eters nese lute snp and cen obvious sep of ing he eat aor under {heen oe adnan fete eat sipition he problem and ean cect gud git ales tat cherie ‘Sc Btth geealston ot anya orem st ald Sethe a-nation of per ins rina specs mt. Isermor oa nent xcept to fr eampl ob ep alr operating primary on toda sup compte eqs in theo mrt or ay demand thet nl feo alos, every factor can with about 2 ich tation be cae under the feadng pp aun th hending demand he concep Seusedandmayotbe entirely pints thy aes ight But cer ss tee than athe fis example eeu they haven meaning empires “wed bod of aubtantive pote tory ito edged ts rece poverfer eco enomea whch ltntendedto "nll aint eve can how her 1igh org te teat acpi ore Asano gente tel, the nl rt et ofthe ality of «poet i conan cs pedictions with eee The hypothe rjetedi pede Shonrecontraie equ” rae fen than prions rman Shera bythe tepedctonr are not cont peat onions ataced vt has sare many apport ot Entiat evidence can never” ahypote ien ony {to smn ch what we ener met whe nen some inact the ypothrs hat enone” by experience "ovo confision it ahuld perhaps be noted ex that he "pre- icin by whch th vata hypahes ested need not be abst phenomena have otto ati een be recat ofr ‘ets ty maybe abut phenomena hat ate ose but beans ‘hwhich hve ott ben mde oe st ko the pron mang 180 Mion Frida the pedicion, For example,» hypothesis may imply that such and such ‘must have happened in 1906 given some other known crcumstanees. Ifa ‘each ofthe recon eens that stands di happen, the prediction is coufrmas sevens that soc and sich id not happen, the prediction ‘eamtradicte, ‘Thevaidityofahypothssinthssenseienotby elf suficien citerion for choosing aston slteatve hyphae. Observed fact ate ncesnily finite in number, pose bypthess, infinite. I there sone hypothesis that consistent with the ataiabe evidence, hee at lays a infinite number that ae For example, suppove a specific exc axon a pati tlc comamodity produces arse in pice eq to the amount of the tx ‘Thisisconsitent with compete conditions a table demand cure and horizontal and sabe supply curve But itisalso consistent with compet tive conditions anda poskvely or gate slopng supply curve withthe ‘equi compensating hi inthe demand curve or the spy cars with ‘monopoisicconitons, constant maryinalcosts andstabledemand cue, ofthe particular shape seized to peodacethisesultandsoon indefinitely. [Additonal evidence with which the hypothesis iso be consistent may vale ‘out some ofthese porate it an never redce them to single poss bility lone capable of being consent withthe finite evidence, The choice among altenative hypotheses equally consistent wth the masbleevidence ras o some extent be arbitrary, though thee i general agreement that relevant considerations are sugested by the criteria "simplicity and “fut fulness" themsees notions that dety completly objective specication. A theory is "simpler” he les the nial knowledge needed to make a predic- tion wthina gen Fld ofphenomenstismore" fri the more precise the ressking prediction, the wide the area within which the theory ils predisons snd the more additonal ins for farther resect sagen Logica completes und consistency are relevant but play asubsiiary role; Uther uncton isto assure that the hypothesis says watt isintendd to say and does 0 alike forall uses ~ they pay the same role here a checks for frida accuracy do in satistical computations ‘Unfortunately, we can seldons tt particular predictions in the sacl sciences by experiments explicly designed to eliminate what re judged to be the mos important diturbing nfuencer Generally, we mut sly on evidence eas up by the “experiments that happen to aca: The inblity to conduct so-called onto experimen” doesnot my view reflet a basi diference between the socal and physi sciences both Because t {eat pec othe soll scenes wines astronomy ~and bce the sistineon between acontlled experiment and uncontoled experiences ‘The Metolgy of Psi eons 1st ubestoncaf degree Nocxperimenteanbecompltelycontelledandevery ‘experiences pari contoled in the sense that some distrbig influences are velatvely constant inthe course of, rience cat up by experience abundant and Gequeny a conclave 1 that rom contrived experiments: ha the inability to conduc exer ‘ents not» fandamental obstacle o testing hypoteres by the sicest oftheir predictions But sich evidence fi more dic ntrpet. It {strequenty complex and alvays indie and incomplete scallion s ‘fen arduous, and its interpretation generally requires sulveanalysis and involved chain of reasoning, wich seldom catty eal conviction, The denial to economics ofthe drat and diet evidence ofthe “ruil exper ment dos inde the adequate tating of hypthses but thi mc es signicant han the dificil in the way of achieving x reonably prompt and wide consenais onthe concksions jtifed bythe avible evidence Tenders the weeding-out of unsuccesl hypotheses how and “ificute They ae seldom downed fr good and ae always cropping up sen "Theis of cour, considesble variation in these respects, Occasional, experiencecasts up evidence thats about a diet, dramatic and contig ing as any that coud be provid by controled experiments. Perhaps the ‘mot bviosaly important example the evidence rom iftions o the hypothesis that stant increas the quantity of money within ale vey short erodisaccompanied bya substantial increase in prices. Here the evidence fs dramatic an the chan of rezoning required to intepist its relatively short. Ye, despte numerous instances of substantia ses in pcs thelr essentially one-to-one coerespondenee with substantial rises fn the stock of money, andthe wide vation in oer crumstances hat might appear tobe relevant, ech new experience of ination brings forth vigorous contentions and not ony by the lay publi, thatthe ris in the Sok of money it citer an incidental fet of rie in prices produced byother actors ora purely fortuitous and unnecessary concomitant ofthe Price rise One eet ofthe ecu of esting substantive economic hypotheses tas Been 0 foster a eter into purl formal oe tautologial analysis? As already sotd,auolgis have a extemely important place in exnomses nud other since a a specalzed language ot “analytical filing syst” Beyond tis, formal loge and mathematics, which ae both tastloges, reeset sin eecking the corectnes of resoning, discovering the impletons of hypotheses and determining whether exposed diferent hypotheses may not aly be equivalent or wherein the dferences 182 ion Fridan ‘Bur economic theory must be more than a structure of tautoogis iit ‘stobeable to predict and not merely describe the consequences of action; if it ao be something feet fom disguised maberatics™ And the wefan othe autlogesthemseesulmately depends as noted above, ‘on theaceptbityfthesebstantive hypotheses that suggest the partclar "tegories int which they organize the refactor epi phenomena ‘Amore serious eft ofthe difcly of testing economic hypotheses by thir predictions it foster misunderstanding ofthe rle of empires] idence in dheortcal work. Empirical evidence i vital ato diferent, ‘hough closely related, stages in constructing hypotheses and in testing {hel ait. Full and comprehensive evidence an the phenomena to be generale “explained” by a hypothe besides it obvious vale in gesting nee hypotheses, is neded fo ast that a hypothesis explias ‘wba it sete otf explain tht its implieations fr uch phenomena are ‘ot contracted in advance by experience that hasalrendy been observed ‘Given that the hypothesisis consistent with the evidence at hand, its farther testing involves deducing from it new facts capable of being observed but ‘ot peviously knoe and checking these deduced facts guns addtional pil evidence. For this test to be relevant, the deduced facts must be about the class of phenomena the hypoess is designe to explain and ‘hey must be well enough defined so that observation ca show them tobe wrong The two stages of constructing hypotheses and testing their alii are telatd in two diferent respect Inthe st pls, the particule fc that eter a each stage are party an accident ofthe cllecton of data an the Jnowlee of the particular investgno. The facts that serve as test of| the implications ofa hypothesis might equally well hve been among the raw material used to cnstruct i and conversa, Ln the second pace, the process never begins rom seth the sled “ntl tage tl alvays Involves comparison ofthe implication fm exter st of hypotheses with observation; the contraction ofthese implications isthe stimula othe construction of ne hypotheses or revision of od oes Sothe two method ‘logical distin tages are always procedg jointly. “Misundestanding bout this apparent staghtorward proces centers ‘onthe phrase "theca of phenomena thehypotessicdesgnedtoexplai,” ‘The diel inthe social sciences of geting new evidence for ths clas ‘of phenomena and of ging is conformity withthe impiations ofthe Inypothesis males it tempting to suppote that othr, more rea avible crilence equally leant tothe ality ofthe hypothess-tosappoethat hypotheses have nt only “impiations" bat lo “assumptions” and that The Meteo of sitive Benanies iss the conform ofthe “assumptions to "rai ia test ofthe aii of the hypothesis dient roo ariianal to the test by implications, tis ey held view is fundamental wrongand productive of mach mischie. Tar fom proviingan easier nes for sting ali rom iailypotses, itonipconfsesthe sus, promotesnsundertandngaboutthesigpicance ‘of erpirialevidencefor economic theory,prodaceamisiretion of mi lntlectual tfort devoted othe development of psitve economics and impedes the atsinment of consnass on tentative bypatess in postive Tn o fa as theory canbe sid to have “assumptions” at al and in 50 far as theta” canbe judge independent ofthe vali of pedi tions the relation betwen the signfcance of theory and the "eal fis “ssumptons almost the poste of that suggested by the view Under eicsm, Truly important and sigan hypotheses wil be found {ohave"stsuimtions that are wily accurate descriptive representations ‘frei, and, genera the more significant the theory, the moc urea {ithe asumptions in thissente) "The reasons simple. Aypothesisis important it “explains” much by ile, tht si abstracts dhe common snd rac elements tom the mas of complex and detailed circumstances Srounding the phenomena tobe explained and permite vaidprediions ‘on the bas of them sane T be important, therfore a ypothesis must ‘be descriptively false in it asurnptions i aks account of, and acounts fox, none of the many other attendant dtcumsances, since its very sucess shows them tobe irrelevant forthe phenomena to be pained To uth pot ts paradoialy the reevant question taskabout the ssmplions” ofa theory snot whether they are desert "realist. they never are, but whether they ae ufciently good approximations forthe purporein hand, And this question cn be answered ony by sexing eter the theory works which ans whether I yields sufcienly acc rate recons, The two supposedly dependent tests ths reduce © one The theory of monopolistic and imperet competion sone example of the nlc in econanne theory ofthese propositions The development of thisanalysiswasexpledyaothate, anit wide aceoptance ard approval largely explained, by the Bel that te ssumprions of perfect competi- tion perfect monopoly” id to underlie neoclassical economic theory ‘ue fase image of reity, And this bl was itself Based almost entirely fo the diety perceived descriptive accuracy a the assumptions rather than on any recognised contacto of predictions derived fom neols- sia exonomic theory. The lengthy dicusion on marginal anayss inthe st Miton Bina American Bzonomic Review soe years ago san even clears though much lesimportant expt, The aticesonboth sie of he contovesy largely elect what ses to me clea the main isue~the conformity to expe "ener ofthe implications of the marginal analysis and concentete onthe lage relevant quetion whether businersmen door donot nf ech thei decionsbyconsltingschedals orcarer or ltvariable anctions shoving marginal eos and marginal even Perhaps thee to ex les and the many other they rei suggest, wl set justify amore “extensive disusion of the methodlogcl principe involved than night ‘otherwise seem appropri. IL Cana Hypothesis be Tested by the Realism ofits Assumptions? \Wemaystartvithasimplephyscal example the law oiling bods tran accepted hypothesis tht the acseraton of body dropped ina yea ‘constant- sor aproximatly 32 fect per second per scondntheearth~ {nd isindeperent of the shape of te body the manner of dropping es. “Thsimplis thatthe dance traveled bya lingbody in any specibed ine ingiven by the formulas = 1/2, where ss the distance uaeld in fet ‘and sine in seconds The application ofthis formula wa compact all “topped ffom the rot ofa bling is equivalent to saying hata bal 30 “iopped behaves rit wer fling vacuum. Testing thishypotheisby it asumptions presumably means measuring the atl sir presse and ‘ecng wether is elose enough to 20. At sca eel the ir pressure isabout 15 pounds per square inch, I 13 suicienty close to ze forthe dlference tobe judged insignificant? Apparent iis since the actual time taken by 8 compact bal ofl fom the roo fs building tothe ground is very closet the time given by the formula. Suppose, however tha 2 fener is dropped instead of compact all The formula then ges wily inaccusate ests Apparently, 15 pounds per squire inch i sniicanly dierent rors zero fora feather bat not fra ball Os agin suppose the Formula applied toatl dropped oman airplane stan atte of 30.000 feet. The sr pressure at this alte ir dciedl les than 15 pounds per square inch. Yet the neta ie offal om 30,00 fet to 20,00 fet at hich point thea pressure isl muck les than at ea level, wil fer otceabiy fom the time predicted by the formula much more nodcably than the tine ake by a compact hall fl om the oo of building the ground, According to the formula, the veloc ofthe ball shoul be gt an should therefore increase steadily In fc bll dropped a 30,00 fet ‘sil each it top velcty wel before it his the ground And simalay with ater implications ofthe formula, ‘The Matholoy of Psi onoies 155 The itl question whether is suficenly ose to ata forthe ifr enc tobe jaded insignificant islet afolsh question by tel. Fite pounds per square inch s 2,160 pounds pe quate oa, D073 ton per ‘quench, There no potible as fo caling these narbers “sal” of are” without some extemal standard of comparison Ad the ony re ‘ant standard a comparison ithe ar pres for which the formula docs te doesnot work underapivensetofctumstances,Buthisrasethe sre problemata second lvl Whit isthe meaningof does or doe not work"? ren if we cool eliminate errs of mesure, the measured ime of fll would seldom if eve be precisely equal the computed time of ill oe large must the dference between the two be to justly saying that the theory “doesnot work”? Here there are two important extemal standards ofcomparson.Oneisthe curacy achievable by an aerate theory with which thi theory i being compared and wich equally acceptable onal oer grounds. The other aries when there exists theory that sown to yield beter predictions but ony at a rete os. The guns fom greater, ‘accuracy, which depend on the purpose in mind, mus then be balanced guns the costs of echivig it “The example illustrates both the inposbity of etn a theory by its assumptions and als the ambiguity ofthe eneept “the msumptions of & theory" The formulas = 1/2 valid for bodes flingin a vaca and ‘ane derived by analyzing the behavior of sich dis. Ica therefore be stated under a wide range of creumstances, bodies that ll inthe ctl mosphere behave af they were falling in vac. ln the ngage so ‘common in economics this would be rap ansatd ito the forma sures a vacuum Yet tcl dogs no sch thing, What it doe sy ie ‘hatin many cases the existence ofr pressure, the shape of the bod, the ‘nae ofthe pessoa droping the ody the kn of mechanism used top the body ad a host of other attendant ccumsances have no appreciable lfc on the distance the body filsin aspect time. The hypothesis en ‘eal be rephrased to omitall mention ofa vacuums under wide range ‘ofeitcumstances the distance aod falls ina specif times givenby the formulas = 12 g. The history ofthis formula and ts aad ppl ‘theory aside i it meaningl to sy ha tarsus 2 wacom? For al now there may be oe set of assumption that would yield the sme formula. The ora acepted beste it works, no ech We ie in au approximate acu — whatever that means. ‘The important problem in connection withthe hypothesis i to spc ify the creumstances under which the formula works og, more preely, the general magnitude ofthe err i is predcons under various ein stances Indeed ais implicit in the above ephesingo the hypothe sich 156 Mit tina specification isnotonethingand the hypothe anor: The specication Fsiteelfan csental pat of the hypothesis, and it ia pare hat i pecaay lilaly tobe revised an extended ar experience accurate Inthe purtiularca of filingbodes a more pene, thoogh silicon plete, theory isan gly ea el of ters to explain the eons ‘othe simple theo, om which the influence of ome ofthe posible di turing factors an be calculated and of which the simple theory a special ‘x Hever ides nataleayspay to wsethe more general theory because the eaten secoracy it yields may nt js the extra cos of using it, 50 the ‘question under what circumstances the smplr theory works wellenoegh Fema important. Air presire fone but only oe, af the Yrables hat ‘efne thee circumstance the shape ofthe body the locity attained and silloter variables ae leant aswel, One way onterpetingthe vrben ‘the than alr presuteeto eaten as dterning whether particle departure rom the astumptin” of vacuum iso i not sigiiant. For ‘example the difference in shape of the body can be sid to make 15 pounds er guar inch sigan diferent fom zero fora feather bat not or a ompactall dropped moderatedsance, Suchastatement must howeve, be sharply stngished fom the very diferent statement thatthe theory ce not work for fester beaut ie assumptions ae ise. The relevant ‘elton rune the oter way the sumptions te ale for a eather because {he theory des not work. Ths point needs emphasis, because the ently ‘ald use assumption pcg the circumstances for which theory hold is equeay and ersneousy, interpreted to mean thatthe assump ‘ons cam be sed to detorine the ccumsances for which a theory olds, tnd has inthis ay, been an portant source ofthe bli hat theory ‘ane tested by te nssptions Letustura nove toanother example thistines constructed one designed tbe an analogue of many bypothessin thesia sciences, Consider the ens of eves around ste sugest the hypothesis thatthe leaves are positioned as if each le deliberately sought to moaximire the amount of ‘ualight i tec, given the position of neighbors, as ft hrew the physical avs determining the amount of sunlight that would be received In various postions and could move rapidly or iastantaneously fom any ‘one potion to any ater desired and unoccupied positon Now some Of the more obvious implications af this hypothesis ave ety consistent With experience for example, leaves aren general dente on the south an fon the north side of trees ut, a the hypothesis imple, ese 20 nat salon the orther slope of hill or when the south se ofthe tees is shaded in some other wa. Is the hypothesis rendered unaceepable or “The Metodoogy of Pastive Banos 137 invalid boca so faras we knot eves do not “ibeste consciously sex” have not bento school and lered the relevant le of ence oF the mathematics equited io calulate the optim” positon, and cnt ove fiom position o position! Clay, none ofthese contradictions ofthe Iiypotheis i italy sevant; the phenomena involved are not within the “dass of phenome the lypotheisdsigned to explains the hypothesis oes not assert that eves do these things But eal that Ui density the same as they dd, Despite the apparent fly ofthe “assumptions” ‘ofthe hypothesis thar gest platy becnse ofthe conformity of is implcationswith observation, Weare inlined to“erplan”iteaiityon he ‘ground hat sunligtcotsibutstotherowthofleesand hat henceleves ‘wl grow denser or more ptaive leaves survive whee thet smote sun, 50 ‘he result achieved by prey pssveadapatontexeralcecumstancesis the sue asthe ret that would be achieved by deliberate accommodation to them, Thisalterative hypothesis inno atrctie than the canstactd hypothesis not because its “astumptins” are more “elite” but rather brctse it pat of more gener theory tha applies toa wider arty of penomenof which the postion of ees around a tree isa special ase, has more implications capable of being contradicted, and as fled to be ‘contradicted under a wider variety of crcustancs, The diet evidence forthe growth afleavsis in this way strengthened by the indivet evidence fromthe other phenomena to which the ore general theory appli, “The constr hypothesis is presumably valid that iy lls“ en” accurate preicions about the density of aes, ony Tor a pati: tia lg of ccusances. donot know wha these cranes are OF how to define them. I seems obvious, howeves, that inthis example the ssumption” of te theory wil lay no pat in speciyng them: the kind oft, the character of th sole ate the types of variables tat are Daly to define its ange of vad, not the ality ofthe lee odo compa mathematics orto mae fom pace ope. ’ largly parallel example nln human behavior hasbeen wed ee. where by Savage and me ® Consider the problem of predicting the 0% rmadeby anexper bili player seems ntat all unreasonable hate. len rections would be yee bythe hypothesis thatthe bland player rade his shot asf he knew the complicated mathematical formals that woud give the optimum directions af wal, could estimate accurately by ‘etheanges et, describingthe location ofthe balls could make lightning {alulatons fom the forms, and could then mak the bls rel nthe Arecton indicated by te formule. Our confidence inthis hypothesis x not bse on the bli that ilar payers, even expert one, an 07 do 0 1s ‘Miton Finan though the proces esrb t drives rather rom the ai hat unless in sore way ov oer they were capable of reaching eseataly the same esl they would uot infact be exper biliaed payer. sony shot step fiom these examples fo the economic hypothesis hat under a wide ange of cicumstances indivi rs behave sf they rere sekingralonaly to maximize their expected returns (generally ‘isleadingly called "profits" and ad ful knowledge ofthe data needed to sce in this tempt a fai hey Knew the televant cost and eran functions, alta marginal ost and manga revenue fom all ‘ction open to them, and pushed each ine faction Toe point at which ‘the elevant marginal cot and marginal reverse were equal Now, of ‘te This icles ress economical presentation ofthe hypothesis the statment that eaves sek to maximize the sunlight each receiver The Inter statement in fle, simple smmacy ofthe rues in the above lis eve ifthe is were indefinitely extended, since it indicates both how to determine the fentares ofthe envzonmient that ate important forthe ticular problem and how telat their elf, is mote compact and tthe sare tine oles comprehensive More generally hypthessortheory consist of an ssetion tat certain foycesare,andby implication exersarenot, important fora paral class ‘ot phenomena and specication of the manner of ction of the forces it fers tobe important. We can roar the hypothesis as consisting 00 parte itt» concepial world or abstract model simpler than the “real ‘world and containing only the fovces tha the hypobess asserts to be important second, st of rules defining the clas of phenomena for which the*mode” an be taken tobe anadeguaterepresestaion fthe"eal wos” and specifying the corespondence Between the varies eats in the ‘Model and obervble phenomena “These opus are ery diferent ia character The model sabtact and ‘eomplete ita ages" or log” Mathematics nd formal logic ome into thee own in checking its consistency and completeness and exploring its implications, Thete sn pac inthe mode or, and no function to be served by, vagueness, maybe’, or approximations. The ai pressure i230, ‘totaal fora vacuum the demand cute forthe pradutotacomptiive producer is horizontal (haa slope of 210), nt "almost horizontal” "The rues for using the model, oa the othe hand, csnnot posbly be strat and compete, They mus be oneret an in contequene incom- Pete completeness pose only nw conespl word notin the “real ork," however that maybe interpreted. The modes he logical embod- iment ofthe halFtrth “Thee is nothing new under the sun" the rules for applying it cannot nee the equally sgicanthal-rth, "History ever tepeatitselé* To a considerable extent the les canbe formulated ‘expliity~ mos easly though even then nt completly, when the theory is prt ofan expici more general theory ain the example of he vacuo theory for ling bodies, In seking to makea scence at objective” apo sl, ou aim shouldbe to formulate the rls expe nw fara posible nd continually to widen the range of phenomena fr which its posible to dos. But, no mater how sues we may bein thi temp, hove ‘he Meholgy of Positive sonics vet inevitably ill:emain room for judgment in applyingthe rls. Each our ences some Fates peculiarly is own, ot covered bythe explicit rules. The capacity o judge tht theve ae orate not to bedstead that they should or should not affect what observable phenomena ae tobe Went: fc with whens inthe model is something that canor be taught «canbe ened bat ony by experience and expos inthe right” scenic stmosphere, not by rte, Tes at this point thatthe “amateut separated fiom the profesional” inal scenes and tha the thin ine drawn which

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