Showing posts with label religion. Show all posts
Showing posts with label religion. Show all posts

Wednesday, May 9, 2012

Is Theoretical Economics Like a Religion

I have heard the complaint that theoretical Economics is similar to a religion.  Theoretical Economics is making arguments based on a priori knowledge, which is knowledge that is true without empirical evidence.  It is argued to be true based on logical reasoning alone.  In math the argument: if A > B and B > C, then A > C.  This doesn't require statistical samplings and running regressions for us to know it is true.  Much of math is built on a priori ideas.  In Economics, an a priori argument could be the marginal utility of an object declines the more you have of it.  The marginal utility is how much enjoyment you receive out a given unit of objects.  Thus, a person may get a great deal of utility from having one computer.  However, the amount of utility a person gets from a second computer will be necessarily smaller than the first.  It is possible for the utility to be the same, but it will never be greater.  Surfing the net, checking email and so forth can be done on the first computer.  The second one can be used to run a web server, or do some kind of processing, but it will not add as much utility to the person as the first computer.  It is not necessary to conduct a survey and determine if the utility actually falls with the second computer.  Just through logic, we can know that utility will be smaller, and from there construct the demand curve.