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In a message dated 99-09-27 20:11:01 EDT, Alan Freeman wrote: 
 
<<  
 It seems to me that the question 'what is endogenous to the market' is  
 co-terminous with the ontological question 'what is a market'? Since  
 this is in a sense the definition of the subject matter of economics, it  
 strikes me as a significant deficiency that the distinction is used so  
 much, and seems to be discussed so little.   
 >> 
 
Just a quick reply to what is an interesting and complex question.  
 
When characterizing a market and the market process, we specify  
variables and the relationships between them.  The magnitudes of one  
or more of the variables are "determined" within the four corners of the  
model that we build---we call these endogenous variables.   Other  
variables have values or specific limits on their values stated at the  
outset before the model is set to work.  These values are specified as  
ocurring outside the model ---they are exogenous variables.    
 
The river flows within banks of the river that do change---are always  
changing to some extent---but for some purposes of analysis can be  
considered fixed or permanent.  These (the banks) are therefore  
exogeneous to the model of the river and our model of how its flows.    
 
To summarize, what is exogenous and endogenous is imposed on the  
real world by the human mind.   Characterizing variables one way or  
another way does not commit oneself to any ontological description of  
the world and the way it works.  One can argue that models that  
continually help us understand the world and make that world  
comprehensible must (therefore) capture something fundamental about  
the world and the way it actually works.  This position might be  
contrasted with view that the model tells us more about the way our  
minds work and less about the world itself.  Still, I think it is possible  
to separate any ontological description of the world from the more  
limited question about what constitutes explanatory success in the  
social sciences.  There is always the broader set of questions about  
what is science and its relationship to truth or true understanding.   
 
Laurence S. Moss 
 
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