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Hume: The power of abduction and simple observation in economics

Listed author(s):
  • Jorge Streb

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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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
Handle: RePEc:cem:doctra:417
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  1. Ricardo F. Crespo, 2011. "Two conceptions of economics," Journal of Applied Economics, Universidad del CEMA, vol. 14, pages 181-197, November.
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  9. Filippo Cesarano, 2006. "Economic history and economic theory," Journal of Economic Methodology, Taylor & Francis Journals, vol. 13(4), pages 447-467.
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