The usefulness of truth : an enquiry concerning economic modelling

This thesis attempts to justify a normative role for methodology by sketching a pragmatic way out of the dichotomy between two major strands in economic methodology: empiricism and postmodernism. It is important to understand that my thesis is about methodology and this means that I do not add another recipe with prescriptions as to how economics needs to change in order to become a " better " or " proper " science. Instead, I discuss several methodological approaches and assess their aptness for theory appraisal in economics. I begin with the most common views on methodology (i.e., empiricism and postmodernism) and argue why they are each ill-suited for giving methodological prescriptions to economics. Then, I consider positions that avoid the errors of empiricism and postmodernism. I specifically examine why the two major strands of methodological criticism fail to give helpful methodological advice to economists and sketch out a pragmatic approach that can do this. Basically, there are two different demands from empiricists: the first requires that economic models become more falsifiable and their results must be more severely tested. The second demand claims that the behavioural basis of economics (i.e., the rationality assumption) must be enriched or replaced by more empirically founded theories of human behaviour. These two attacks are the most common and best known forms of criticism against mainstream economics. I counter these attacks by showing that the theoretical core of mainstream economics can be defended as fruitful and largely unempirical heuristic device. This does not mean that more empirical approaches are ruled out, but it does mean that the state of economics is not as hopeless as the empiricist critic suggest. After rejecting the empiricist position I turn to postmodern relativism. I first present the general idea and then turn to some of the