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Keynes's Treatise on Probability at 100 Years: Its Most Enduring Message

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  • Carlo Zappia

    (Università degli Studi di Siena)

Abstract

On the occasion of the assessment of the enduring influence of Keynes's Treatise on Probability at 100 years, this paper focuses on its relevance for decision theory. The paper places emphasis on Keynes's introduction of the epistemic notion of probabilities that often are non-numerical, as a theoretical object intended to replace frequency probabilities. The paper argues that, as non-numerical probabilities make it possible to deal with uncertainty as if individuals were endowed with interval-valued probabilities, Keynes's 1921 critique of contemporary frequency probability theory turns out to be relevant also with regard to the yet to be established subjective probability theory. Although non-numerical probabilities were used by Keynes to criticize the contemporary application of probability to conduct, it must be acknowledged that, still today, they may constitute an appropriate tool for decision-making when confronting uncertainty, as he hinted at in his late 1930s correspondence with Hugh Townshend.

Suggested Citation

  • Carlo Zappia, 2021. "Keynes's Treatise on Probability at 100 Years: Its Most Enduring Message," GREDEG Working Papers 2021-36, Groupe de REcherche en Droit, Economie, Gestion (GREDEG CNRS), Université Côte d'Azur, France.
  • Handle: RePEc:gre:wpaper:2021-36
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    References listed on IDEAS

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    1. Richard Arena & Eric Nasica, 2021. "Keynes's Methodology and the Analysis of Economic Agent Behavior in a Complex World," GREDEG Working Papers 2021-10, Groupe de REcherche en Droit, Economie, Gestion (GREDEG CNRS), Université Côte d'Azur, France.
    2. Carlo Zappia, 2016. "Whither Keynesian probability? Impolite techniques for decision-making," The European Journal of the History of Economic Thought, Taylor & Francis Journals, vol. 23(5), pages 835-862, September.
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    4. Lawson, Tony, 1985. "Uncertainty and Economic Analysis," Economic Journal, Royal Economic Society, vol. 95(380), pages 909-927, December.
    5. Backhouse,Roger E. & Bateman,Bradley W. (ed.), 2006. "The Cambridge Companion to Keynes," Cambridge Books, Cambridge University Press, number 9780521600606, October.
    6. Richard Arena & Eric Nasica, 2021. "Keynes’s methodology and the analysis of economic agent behavior in a complex world," Post-Print halshs-03236491, HAL.
    7. Carlo Zappia, 2021. "From Knightian to Keynesian uncertainty: contextualising Ellsberg’s ambiguity," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 45(5), pages 1027-1046.
    8. Michael Emmett Brady & Rogério Arthmar, 2012. "Keynes, Boole and the interval approach to probability," History of Economic Ideas, Fabrizio Serra Editore, Pisa - Roma, vol. 20(3), pages 65-84.
    9. Gilboa,Itzhak, 2009. "Theory of Decision under Uncertainty," Cambridge Books, Cambridge University Press, number 9780521517324, October.
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    11. Anna M. Carabelli, 2021. "Keynes on Uncertainty and Tragic Happiness," Palgrave Studies in the History of Economic Thought, Palgrave Macmillan, number 978-3-030-75665-9, February.
    12. Alberto Feduzi & Jochen Runde & Carlo Zappia, 2014. "De Finetti on uncertainty," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 38(1), pages 1-21.
    13. Carlo Zappia, 2015. "Keynes on Probability and Decision: Evidence from the Correspondence with Hugh Townshend," History of Economic Ideas, Fabrizio Serra Editore, Pisa - Roma, vol. 23(2), pages 145-166.
    14. Richard Arena & Eric Nasica, 2021. "Keynes’s methodology and the analysis of economic agent behavior in a complex world," Revue d'économie politique, Dalloz, vol. 131(3), pages 371-402.
    15. Marcello Basili & Carlo Zappia, 2021. "Financial markets and Keynes’s long-term expectations," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 45(5), pages 1047-1067.
    16. Robert Skidelsky, 2011. "The relevance of Keynes," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 35(1), pages 1-13.
    17. Basili, Marcello & Zappia, Carlo, 2009. "Keynes's "non-numerical" probabilities and non-additive measures," Journal of Economic Psychology, Elsevier, vol. 30(3), pages 419-430, June.
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    More about this item

    Keywords

    probability; uncertainty; decision-making;
    All these keywords.

    JEL classification:

    • B21 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - Microeconomics
    • B31 - Schools of Economic Thought and Methodology - - History of Economic Thought: Individuals - - - Individuals
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty

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