REALISM AND ABSTRACTION IN ECONOMICS (william)
- Highlight on Page 10 | Added on Monday, March 12, 2012, 12:50 AM
Friedman’s mistake lies in taking a theory that incorporates ancestry, eye color, and so on to be the “logical extreme” of realism. But realism does not demand that all these extraneous traits be specified; it merely demands that their nonexistencenot be specified either. Those who criticize neoclassical models for their lack of realism are not seeking a precisive abstraction that more closelyapproximates reality; rather, they are seeking an abstraction that is not precisive at all. The right question to ask is not “How closely should our theories approximate reality in order to yield useful predictions?” but rather “How much specificity should our theories incorporate in order to yield useful explanations?” It’s a mistake to talk, as even Austrians sometimes do,4 about degrees of realism. All nonprecisive abstractions are equally realistic: “Cujo is a Saint Bernard” is no more realisticthan “Cujo is a dog” (though it is more precise, just as a measurement of 2.00 is more precise than a measurement of 2.0—not more correct, but correct to more significant figures)
