ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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Causal Inference and Scientific Explanation in Economics

Causal Inference and Scientific Explanation in Economics

The debate on causality in the social sciences in general, and economics in particular, can hardly be regarded as settled. A vital point which seems to have escaped the debate is that causal laws and economic processes themselves can change, as economic institutions evolve. Thus the standard econometric methodology of verifying and refuting hypotheses from observed realisations of time series data is seriously at fault. What is needed is a meta-theory, which also encompasses the effects of institutional change on economic processes. The search for such a theory is likely to prove elusive, but as economics attempts to push beyond its conventional frontiers of postulating static theories it is very likely to lose much of its formal mathematical seductiveness and take on more the appearance of a narrative-descriptive science. Many may regard this as retrogression, but at least a few will welcome it as a step taking our subject closer to the vision of its founding fathers such as Smith, Malthus, Ricardo and Keynes.

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