Gary Becker: Model Economic Scientist

Heckman, James J. Gary Becker: Model Economic Scientist American Economic Review 105 5 74-79 2015 10.1257/aer.p20151106

  • Friedman consistently applied price theory and Marshallian partial equilibrium analysis to analyze a rage of economic questions. Friedman (1949) contrasted the empirical fruitness of the Marshallian approach with the empirical sterility of Walrasian general equilibrium theory.
  • He (Becker) rejected the purely inductive approach of Burns and Mitchell that "facts could speak for themselves." Like Koopmans, he strongly believed tha all measurements needed to be guided by theory. Like Friedman (1953), he also rejected a purely theory-based approach to economics and the sharp distinctions among the tasks of theory creation, model identification, estimation, and inference that were featured in the Cowles approach to econometrics. He often said, "economics is a dialogue between theory and data and should never be either one or the other." Becker recognized that any distinction between model and data is always imprecise. Data suggest theories. The theories so constructed are best tested with new data (fresh samples of data) and by considering and testing additional implications of the theories.
  • The constant interplay between theory, data, and revision of the theory are core features of science....This approach to model building is the essential feature of the scientific method. It is neither purely inductive or deductive. It is abductive. Abduction -the back and forth between hypotheses (as ecncoded in models) and data- is the essence of serious science.
  • In many of his efforts to understand economic phenomena, he brought creative insights in response to initial mismatches between models and data.
  • The abductive give and take between model and data characterized this research and made his contributions both intellectually innovative and empirically fruitful.
  • The test of a theory was not just in its power to explain a particular empirical regularity but in its ability to explain a wide array of phenomena that had previously been viewed in isolation from each other.
  • Like any scientist, he rejected tautological explanations of phenomena based solely on differences in preferences or on changes in tastes. Such explanations are too facile and often phenomenon-specific with little generality.
  • Becker (1962) ... many of the basic predictions of consumer theory came from variations in constraints, not from the properties of consumer preferences. Irrational but constrained agents still obey the law of demand. Preferences added to this story but are not the fundamental driving force.