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On the confirmation of the law of demand

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  • Mongin, Philippe

Abstract

The paper applies confirmation theory to a famous statement of economics, the law of demand, which says that ceteris paribus, prices and quantities demanded change in opposite directions. Today's economists do not accept the law unless definite restrictions hold, and have shown little interest in deciding whether or not these restrictions were satisfied empirically. However, Hildenbrand (1994) has provided a new derivation of the law of aggregate demand and used this theoretical advance to devise a test that may be the first rigorous one ever performed on the law. The paper accounts for Hildenbrand's and, in less detail, his predecessors' contributions within the philosophical framework of Hempel (1965) and Glymour (1980). Its salient result is that economists have accepted the "consequence condition", and rejected the "converse consequence condition", and thus implicitly adhered to a Hempelian- Glymourian view of confirmation and testability.

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  • Mongin, Philippe, 2006. "On the confirmation of the law of demand," LSE Research Online Documents on Economics 58432, London School of Economics and Political Science, LSE Library.
    • Handle: RePEc:ehl:lserod:58432
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    File URL: http://eprints.lse.ac.uk/58432/
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    References listed on IDEAS

    as
    1. Philippe Mongin, 2007. "L'a priori et l'a posteriori en économie," Recherches économiques de Louvain, De Boeck Université, vol. 73(1), pages 5-53.
    2. M. Browning & P. A. Chiappori, 1998. "Efficient Intra-Household Allocations: A General Characterization and Empirical Tests," Econometrica, Econometric Society, vol. 66(6), pages 1241-1278, November.
    3. Hildenbrand, Werner, 1989. "Facts and ideas in microeconomic theory," European Economic Review, Elsevier, vol. 33(2-3), pages 251-276, March.
    4. Hildenbrand, Werner, 1983. "On the "Law of Demand."," Econometrica, Econometric Society, vol. 51(4), pages 997-1019, July.
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    6. Milton Friedman, 1957. "A Theory of the Consumption Function," NBER Books, National Bureau of Economic Research, Inc, number frie57-1, July.
    7. Hausman,Daniel M., 1992. "The Inexact and Separate Science of Economics," Cambridge Books, Cambridge University Press, number 9780521425230, December.
    8. Hardle, Wolfgang & Hildenbrand, Werner & Jerison, Michael, 1991. "Empirical Evidence on the Law of Demand," Econometrica, Econometric Society, vol. 59(6), pages 1525-1549, November.
    9. Blundell, Richard, 1988. "Consumer Behaviour: Theory and Empirical Evidence--a Survey," Economic Journal, Royal Economic Society, vol. 98(389), pages 16-65, March.
    10. Hicks, J. R., 1986. "A Revision of Demand Theory," OUP Catalogue, Oxford University Press, number 9780198285502.
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    12. Hausman,Daniel M., 1992. "The Inexact and Separate Science of Economics," Cambridge Books, Cambridge University Press, number 9780521415019, December.
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    JEL classification:

    • J1 - Labor and Demographic Economics - - Demographic Economics

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