Philosophy of Economics: A Contemporary Introduction

Julian Reiss

Book cover

Overall I would say this was a pretty good book, but with mixed relevance to me. I feel like it would be more accurate to call it “Philosophical Issues in Economics,” because to me “Philosophy of Economics” implies something more unified than what the book contains. It’s a grab bag of issues that don’t seem to be connected by a clear intellectual structure; just that they are things that touch on both philosophy and economics. (To be fair, after reading the book I looked up the Wikipedia article on “Philosophy of science” and concluded that that discipline is about as much of a grab bag as this book is. So, I don’t think Reiss is being misleading with the title; it’s my expectations that were off.)

That aside, I think this book is a great introduction to a variety of interesting issues. Many of them are things that I have studied before, particularly in a college class on Rational Choice (e.g. philosophical issues in expected utility theory and game theory). However, some of it was also fairly new to me. Reiss provides a pretty convincing critique of Nash equilibrium as a particularly worthy solution concept in game theory; I had never encountered the issues he raised despite a reasonable amount of reading in the subject. The section I enjoyed most was on the application and significance of models–the topic closest to my own day-to-day work. Reiss sort of jumps off from a cliche often used by modelers: “All models are wrong, but some models are useful,” and turns it into a very interesting philosophical discussion. In short, he presents three incompatible statements:

-Economic models are false.
-Economic models are nevertheless explanatory.
-Only true accounts can explain.

The tension between these statements makes one think very hard about the epistemological role of models. I can’t say that I have a complete answer, but my main line of thinking is to see models as playing a similar role to analogy. Analogies are also not “true” in any strict sense, but they can play a role in helping us to understand things. I think extending this mapping can be fruitful too. For example, it is fairly easy to develop different analogies to make opposing points, and this is a critique frequently brought toward modeling as well. I suppose I still have analogies on the brain from reading Hofstadter’s book “Surfaces and Essences.” (Hofstadter would relish the fact that the mapping of models to analogies is itself an analogy!) Of course, treating models as analogies raises a whole set of philosophy-of-economics questions. If there is no definitive way of proving models to be true or false, then how does the “science” of economics progress? How do we even judge models? While I was reading this book, Stephen Colbert’s neologism, “truthiness,” came to mind. As in: models become accepted not because they are true, but because they have truthiness, a quality that combines reasonable fidelity to reality with a heavy dose of appeal to the observer’s preferences and preconceptions. And then, I came across the following line: “[Robert] Sugden explicitly rejects thesis three of our paradox: ‘Credibility is not the same thing as truth; it is closer to verisimilitude or truthlikeness.’” I think Reiss missed a golden opportunity to name-drop Stephen Colbert here, and it wouldn’t have been out of character for his writing style.

An interesting introduction to many topics. Reiss provides a lot of references for further reading, and I would like to follow some of them up.

My Goodreads rating: 3 stars