Hume: The power of abduction and simple observation in economics
AbstractIn 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 InfoPaper provided by Universidad del CEMA in its series CEMA Working Papers: Serie Documentos de Trabajo. with number 417.
Length: 33 pages
Date of creation: Mar 2010
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abduction; case study; realistic assumptions; Hume; Mill; Peirce; Hayek; Akerlof;
Find related papers by JEL classification:
- B1 - Schools of Economic Thought and Methodology - - History of Economic Thought through 1925
- B4 - Schools of Economic Thought and Methodology - - Economic Methodology
- E4 - Macroeconomics and Monetary Economics - - Money and Interest Rates
- E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit
- F1 - International Economics - - Trade
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