====================== HES POSTING ================== [NOTE: Julian Lamont asked me to post this again because he needs a commentator before the end of October. -- RBE] Dear All, We are looking for a commentator for a paper to be presented at the International Economics and Philosophy Society Session at the 1998 Pacific Division Conference of the American Philosophy Association. The conference will be held at the Westin Bonaventure Hotel in Los Angeles, March 25 to March 28, 1998. The commentary will be 5-10 minutes long. An abstract of the paper appears below. If you are interested in being considered as a commentator for this paper please send a brief CV including your research interests to me ASAP because I have to have the program together by October 31. best, Julian Lamont Centre for the Study of Ethics Queensland University of Technology Email: [log in to unmask] "Meta-Economic Principles" K. R. Sawyer* University of Melbourne Clive Beed University of Melbourne(Retired) H. Sankey University of Melbourne B. Ellis University of Melbourne Abstract In this paper we consider meta-economic principles, those principles which underscore the theoretical thinking of economics. Meta-economic principles are different from laws; they relate to the principles of theory construction, to the assumptions which are implicit in theory, to the constraints imposed on theories and to the analysis and scope of theories. The paper suggests that the evolution of core economic principles follows a branching process, where the state of thought of generation n+1 is determined by a transitional probability function which reflects the experience of generation n, and the history of all generations up to and including n-1. Meta-economic principles determine the transitional structure for the evolution of these principles. We identify seven meta-economic principles. These are not mutually exclusive, and do not necessarily exhaust the set of possible meta-economic principles. The principles identified are: 1. The principle of self-interest or perceived self-interest which underlies utility maximisation in microeconomics and expected utility maximisation in portfolio theory. 2. The principle of incentives and disincentives which is the basis of cost-benefit theory and is used to assess the benefits of public infrastructure theory. 3. The minimisation of transactions costs, which has become a cornerstone of the economics of time-saving technology, the static efficiency of markets and the economics of choice. 4. The principle of rational expectations and time consistency, which has become the basis of expectations theory. 5. The principle of economic versus social man, which has meant that all decisions are represented by economic agents, and ignores individual specific attributes and the interactions of individuals. 6. The principle that everything can be priced, not only goods and services, but concepts, goodwill and values. This has permitted the extension of economics to areas as diverse as religiosity, crime and marriage. 7. The principle that markets tend towards completion, in that the number of assets increases to satisfy the potential payoff and risk structures in the economy. These seven meta-economic principles are inherent in much of economic theory. But curiously, they also become embedded in economic practice. For example, a common assumption of economic theory has been to ignore transactions costs, effectively minimising their impact. In subsequent evolutions of the economic system, transactions costs have tended to decline, so that the results of economic theory are better approximates of reality. The convergence of economic system behaviour in generation n+1, n+2,.. to the meta -economic principles in generation n is an issue explored in the paper. To illustrate the role of meta-principles in economic theory, we consider a number of contemporary articles from the Journal of Political Economy in areas as diverse as trade wars, asset pricing, hedonic models of air quality and the macroeconomics of the French Revolution. In each case, we examine the incidence of the above meta- economic principles, and the effect these principles have on the analysis. The purpose of this casual empiricism is to suggest a model for the use of meta-economic principles. In section 4 of the paper, the testability of meta-economic principles is examined, both in terms of the normative principles adopted in economic theory, and the observed economic system behaviour. The testing of such principles requires both heterogeneity in the type of economic study, and heterogeneity in economic thinking. We discuss the testability in terms of the indirect constraints imposed on economic analysis. In the final section of the paper, a utility based model is developed, whereby meta- economic principles are embedded in a framework of analysis. Formalising the utility function permits a fomalisation of the effect of meta-economic principles, in particular, the effect on the first order conditions in the optimisation problems which underpin most economic analyses. This consideration of meta-economic principles is not dissimilar to the ancillary hypotheses of the Duhem-Quine thesis in that the testing of economic hypotheses cannot be disentangled from meta-economic principles. By embedding them within a utility function, the jointness of economic hypotheses and the meta-economic principles can be better defined. ============ FOOTER TO HES POSTING ============ For information, send the message "info HES" to [log in to unmask]