Do economic theories need empirical support?
Members of the Austrian School of Economics are known for devaluing empirical analysis, favoring an axiomatic approach instead. What is your perspective on this?
I agree with a more axiomatic approach. The whole debate over empirical analysis becomes confused however. I don't think taking an axiomatic approach to economics means that one discounts support for a theory. However, I don't believe that empiricism can, in-and-of-itself, prove or disprove theories. Typically with an empirical approach to anything, one has to asked what exactly is being measured. I'm a counselor, and this is also a debate in the counseling field. Can counseling theories be be proven or disproved by empirical analysis?
The need for empirical support is an interesting one. What does it mean for the empirical data to support a hypothesis? A good theory might not have empirical support if the data does not exist to test it. However, this question brings to mind a related topic.
Robert Lucas (University of Chicago) is famous for something called the Lucas Critique. Essentially, it is naive to try to predict the effects of a change in policy entirely on the basis of relationships observed in historical data.
A good example is the observation that, in American Football, there is too much kicking on 4th down. Thus, we should eliminate 4th down to reduce kicking.
In other words, empirical support needs economic theories.
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