Economics vs Psychology, why the two are apples and oranges

[Riddick]

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Fundamentally, I don't see how you can advocate that "humans act" as fundemental a priori axiom. "A priori" means prior to expereince, but isn't action what makes up experience. What support does anyone have for the proposition "humans act." You obvious counter to this is that in proposing the arguement, a person is validating it. I see that point. But, the grounding to that point would be in experience. So, this fundemental principal that you are advocating, is not a priori, but a posteri (forgot the spelling of it). So, this principal and any immidiate deductions would be based on an inductive and emperieical grounds. This principal does not exist prior to experence.


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Thats somewhat of a difficult question for me to answer on a whim since I know little of epistemology. I do recall some things and have spent the last 10 minutes rereading some old book highlights so basically:

Economics is a science of logic, so it must be constructed on a priori theorems and not a posteriori theorems. All truths and concepts fundamental to the science of economics are logical deductions from our a priori theorem. Much like from the a priori theorem a=a we can logically deduce that if a=b, b=c, then a=c and thus learn something new about the universe from such a seemingly unimportant theorem, we can also learn from the a priori theorem "humans act" the concepts of value, scarcity, time preference, exchange, price, and profit, to name just a starting few.

The reason we know that humans act a prior is because a posteriori nothing can be learned, nothing can be proven or disproven, and nothing can be denied about the existence of the action.

Imagine running a million empirical experiments to develop a theorem about the existence of your consciousness. But since you must have consciousness before initiating any such experiment, we must conclude that you had conscious before the fact. Your one million empirical analyses will then demonstrate absolutely nothing in addition to what you now know a priori.

Economic theorems, the likes of which entire schools of economic thought are built on, cannot be based on empirical knowledge, because any such knowledge is a reflection of specific human beings in specific circumstances at a specific time in history, and could all change overnight (and inevitably will change) thus destroying the school of thought in its entirety. In the couple centuries now of economic thought, history has already been witness to this economist-genocide several times (the Ricardians and the Keynsians to name a couple big ones). Such a posteriori foundations are the reason why "doctrines of economics hold only for a limited period of history" and in limited geographies as well.

Basing a school of economic thought on empirical knowledge would be like basing a mathematical theory of addition on the fact that you just put two mice in a cage yesterday and today there are 37. One plus one equals thirty seven! Seems awfully foolish doesn't it? But then, if I were to say something equally foolish like "The value of a commodity, or the quantity of any other commodity for which it will exchange, depends on the relative quantity of labour which is necessary for its production", I might just fool a few million people and send the entire world astray on a path towards totalitarian socialism.

Here are a few select quotes from economist Ludwig Von Mises in explaining the aprirostic nature of economics.

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New experience can force us to discard or modify inferences we have drawn from previous experience. But no kind of experience can ever force us to discard or modify a priori theorems. They are not derived from experience; they are logically prior to it and cannot be either proved by corroborative experience or disproved by experience to the contrary. We can comprehend action only by means of a priori theorems.

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Consequently, a proposition of an aprioristic theory can never be refuted by experience. Human action always confronts experience as a complex phenomenon that first must be analyzed and interpreted by a theory before it can even be set in the context of an hypothesis that could be proved or disproved; hence the vexatious impasse created when supporters of conflicting doctrines point to the same historical data as evidence of their correctness. The statement that statistics can prove anything is a popular recognition of this truth. No political or economic program, no matter how absurd, can, in the eyes of its supporters, be contradicted by experience. Whoever is convinced a priori of the correctness of his doctrine can always point out that some condition essential for success according to his theory has not been met.

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[Riddick]

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Economic laws like supply, demand, price, profit maximization and so on, have a mathmatical and theoretical foundation.

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They have only logical foundations upon which insightful conjectures can be made about the formation of prices, which is ultimately an extension of the praxeological deduction that prices are an expression of exchange. We know nothing of the shape, size, or position of any supply or demand curve, let alone any specific quantity for which we can express the curves mathematically on a graph.

The intersection of supply and demand is ultimately an expression of the price of a good, but this price or any of the curves intersecting at the price are not based on mathmetical formulas, but rather on human action.

[Propertarian]

Here is a wiki link to the page on behavioral economics a rather new method in economics that has proved to amazingly good at predicting outcomes compared to other methods.

The content of behavioral economics, particularly the work of Nobel Prize winners Kahneman and Tversky, is very important for this question, and the wiki link talks about econ vs psychology for a while.

In my view (I should probably make it explicit) biology and actual human psychology should be the foundations of the study of economics, not 'rational man' or 'humans act' hypothesi.

It looks like I have some reading to do...

And I just started my readings on evolutionary game theory.

[mikeevans12]

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Economics is a science of logic, so it must be constructed on a priori theorems and not a posteriori theorems. All truths and concepts fundamental to the science of economics are logical deductions from our a priori theorem. Much like from the a priori theorem a=a we can logically deduce that if a=b, b=c, then a=c and thus learn something new about the universe from such a seemingly unimportant theorem, we can also learn from the a priori theorem "humans act" the concepts of value, scarcity, time preference, exchange, price, and profit, to name just a starting few.


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The a priori principals that ground logic are things like nothing can be both true and false (Law of noncontradiction) and every proposition is either true or false(law of the excluded middle). From these Laws the logical subjects of sentenial logic, quantificational logic, and modal logic are deduced. With all three of these logical areas the only thing that is granted to these theories is a logically sound process. To clarify the process of evaluating propositions is all that is granted by these foundational theories. So if I am making the arguement.
1. a
2. a->b
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3.b (conditonal elimination of 2 via 1)

The propostion would be valid, but not necessarily sound (sound meaning true). Validity refers to the form of a proposition, where as if the premises are true, then the conclusion must be true. You use the term "humans acts" as the "a" in an arguement. Any "a" or term to refer to a propostion even in logic (correct and formal) is always treated as an assumption, because soundness is never conclusive. So your assumption "humans act" is not necessaily a priori. It would have to be either sythetic or analytic a priori. You could say it is analytic by saying "humans are beings whom act", but there is still a realm of assumption in that analytic claim. I am not saying that empirical data is used to prove your claim that "humans act" only that it is based on an assumption that is founded in expierence. The a prioi principals which all academic and scientific inquaries are based upon are only the logical and mathmatical theorums that exist. The proposition "humans act" is not a logical deduction of these theorums, but a reasonable assumption that serves as content to apply within the foundational process of logic. It is nothing more than an assumption within the logical framework, and support you use to prove this assumption will also be assumptions themselves. Your proposition really reads as "if humans act then X" Key word "if." As in a sufficent condition for X.

You also refer to economics as a science of logic. Science is a means of finding truth through hypthosizing, experienting, and replicting things. This process is inherntly empirical by nature. Thus, contradicting your ultimate point that economics is distinct from pyscology because it has non-empierical foundations.

Economics does have mathmatitical foundations that make it distinct from psycology. But they are only processes and theorms that have been identified. For example, profit is the difference between revenues and costs. That is only a mathamatical principal that uses economic terminology. Humans seek profit, that is an assumption. So, given this assumption, economics bases much of its content on the principal of profit, and apply this model when necessacy. So the truth of the matter is economics is revealed when the human needs for scarce resources is coupled with mathmatical principals. The human element makes economics what it is. On the other hand, Psycology deals with the behaviors of people. Since human behavior and mental processes are needed for the sucessful application of mathmatical principals (necessitating economics), economics also deals with the behaviors of humans. Economics has two necessary conditions : Mathmatical theorums and principals and humans tendencies and behaviors. Economist use these two to postulate propositions. Pychologist use humans tendency's and behavior to create theorums. That is the only fundemental distinction that you can make. But, the fact of the matter is both subjects need content of human tendencies and behaviors to function and exist as subjects seperate from general science and logic. When accounting for human beings tendencies, both subjects involve an element of empierism. In conclusion, since both subject require assumptions about human behavior and tendencies they are not totally distinct. The only distincition they have is the source for thier foundational principals. They both require a human content to apply an principal. Consider Nash's game theory. It takes human behavior into account when offering an equilibrium.

"Concepts without content, are void" Kant

You other point about the "conciousness" thing is similar to the Descartes conclusion of "cogito ergo sum" (I think therefore I am). This is only an assumption as well. Hume argued that point by saying when it comes down to it, is there really an "I" What is an I? When you stirp it down you don't find a soul, only a collection of experences taht make a person different from another. Also, can you say I am thinking. Could another be thinking for you? there is doubt, so even that is an assumption.

So this arguement can serve as a principal that is inductivly validated to serves as a propostion of deduction for other propositions. So even now, your foundational principal to economics is inductivly grounded and a priori propoistions are not inductive. Psycology principals are also inductivly (via scientific method) grounded. It follows that economic and psycology both have inductive foundations. They are really not that disctinct.

[mikeevans12]

Also, an "economic view of man" requires assumptions about man to exist. They incorporate the "why" in thier application of the S&D model, but showing that people buy less at a higher price, because there surplus is contracted. This "surplus" is found by discovering how much a person is willing play then subtracting the actual price from it.
How much a person is willing to pay is a function of (expectations, future price, necessity, quantity and consumer tastes) The economic formula is a function of human things that involve a weak form of psycology. The economics functions that make up many of these areas of economics like consumption, saving, expected future income, and so on are based on enviromental (economic) factors that are made up by humans action in a given time. Human actions in a given time are influenced by thier own factors as well. Similar to human action is a function of (needs, wants, desires, goals, beleifs, and values). So indirectly economics is based on the functions of human action, which are relevent and particular in themselves. Much like psycology.

Economist just don't spend time directly studying what human action are a function of, only that human action is a function of consideration in rendering any economic proposition or strategy.

[Riddick]

I scanned your posts and dont have much time now to read and reply, ill be on 3 vacations over the next 2 weeks so I probably wont reply until then