Formalism, rationality, and evidence

The case of behavioural economics

Abstract

Mark Blaug played a central role in the development of the field of the methodology of economics, alongside his theoretical work and contributions to the history of economic thought. The purpose, in this article, is to focus on his contributions to the topic of 'formalism in economics', in relation to his methodological commentaries on the Popperian and Lakatosian approaches to the philosophy of science. In Blaugian spirit, the discussion is related to economic theory and draws on the history of economic thought. The argument focuses on the troublesome interface between theoretical and applied economics in mainstream economics. The article includes, as a case study, an assessment of new behavioural economics in Popperian and Lakatosian terms. The conclusion is that such an appraisal exercise—i.e., whether the research programme is progressive or degenerative—is clouded by the interface between the form of empiricism promoted by Popper and Lakatos and the methodological framework of mainstream economics. No conclusion is feasible independent of methodological approach.