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Hume: The power of abduction and simple observation in economics

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  • Jorge Streb

Abstract

In Hume’s epistemology, induction leads to discovery in matters of fact. However, because of the poor data Hume analyzes the balance of trade with a thought experiment, doing what Mill makes explicit afterwards: reason from assumptions, to reach conclusions which are true in the abstract. Hume’s potential explanation, what Peirce later calls abduction, is backed by a case study, the price revolution of the 16th century, which supports half his abductive inference, when money supply is multiplied fivefold. Given that economics reasons abductively, Hume’s attention to realistic hypotheses and the adjustment process matters.

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Bibliographic Info

Paper provided by Universidad del CEMA in its series CEMA Working Papers: Serie Documentos de Trabajo. with number 417.

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Length: 33 pages
Date of creation: Mar 2010
Date of revision:
Handle: RePEc:cem:doctra:417

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Keywords: abduction; case study; realistic assumptions; Hume; Mill; Peirce; Hayek; Akerlof;

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