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Ronald Coase and the Methodology of Economics

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  • Sam Peltzman

Abstract

Ronald Coase was skeptical that economics is a positive science in the sense made famous by Milton Friedman. According to Coase, that notion is inaccurate on two counts: economists accept much theory without bothering to test it empirically, and much of their empirical work does not test theory. Coase's view is that we seek (and find) truth in economics via a competition of ideas that uses an eclectic variety of methods. I argue that, as a description of what empirical economics is about, much of Coase's critique is valid, even understated. However, I contend that Coase failed to appreciate some of the costs and benefits implied by his critique. For example, by pretending to be a positive science, economics gains a certain rigor that is useful. But it pays for this rigor with a narrowness of scope. On the other side, I argue that progress is hindered by the easy acceptance of nonscientific evaluations of competing theories.

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  • Sam Peltzman, 2011. "Ronald Coase and the Methodology of Economics," Journal of Law and Economics, University of Chicago Press, vol. 54(S4), pages 15-29.
    • Handle: RePEc:ucp:jlawec:doi:10.1086/661943
    DOI: 10.1086/661943
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    1. Ronald Coase, 2006. "Marshall on method," Chapters, in: Tiziano Raffaelli & Giacomo Becattini & Marco Dardi (ed.), The Elgar Companion to Alfred Marshall, chapter 21, pages 139-146, Edward Elgar Publishing.
    2. William Easterly, 2009. "Can the West Save Africa?," Journal of Economic Literature, American Economic Association, vol. 47(2), pages 373-447, June.
    3. Jeffry M. Netter & William L. Megginson, 2001. "From State to Market: A Survey of Empirical Studies on Privatization," Journal of Economic Literature, American Economic Association, vol. 39(2), pages 321-389, June.
    4. Robert W. Crandall & Clifford Winston, 2005. "Does antitrust policy improve consumer welfare? Assessing the evidence," Chapters, in: Colin Robinson (ed.), Governments, Competition and Utility Regulation, chapter 2, Edward Elgar Publishing.
    5. Richard A. Posner, 1993. "Ronald Coase and Methodology," Journal of Economic Perspectives, American Economic Association, vol. 7(4), pages 195-210, Fall.
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    Cited by:

    1. Mary M. Shirley, 2016. "Ronald Coase: the makings of an iconoclast," Chapters, in: Claude Ménard & Elodie Bertrand (ed.), The Elgar Companion to Ronald H. Coase, chapter 1, pages 7-17, Edward Elgar Publishing.
    2. Sam Peltzman, 2013. "Why Is There No Milton Friedman Today?," Econ Journal Watch, Econ Journal Watch, vol. 10(2), pages 205-209, May.
    3. Oleksandr Cherniaiev & Nataliia Ihnatenko & Oleksandr Kovtun, 2023. "Strategy of directions, forms and tools of state influence on development processes of the regional business environment," Technology audit and production reserves, PC TECHNOLOGY CENTER, vol. 2(4(70)), pages 20-23, April.

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