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Essays in Positive Economics (Phoenix Books) Paperback – August 15, 1966
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As Friedman argues and most economists agree, "positive economics" is possible only when one removes their values or political ideology from their effort to engage in economic science. I found this essay to be profoundly attractive after spending a bewildering year in graduate level philosophy of science. Friedman countered a longstanding emphasis in professional Economics concerning the importance of realistic assumptions with his view that positive science is to be judged on the basis of the accuracy of predictions. Empirical evidence might support the proposition that realistic assumptions are more likely to yield accurate predictions, but at the end of the day we must use predictions to judge theory. An excellent example is found on the cover of The Economist magazine 02Aug2007. The headline on the cover of the magazine was
"A good time for a squeeze The benefits of tighter credit"
Whatever economic theory The Economist was using at the time they made that prediction that theory should have been discarded by subsequent events (the collapse of mortgage prices mostly in the US but elsewhere as well) according Friedman's notion of "positive economics."
Based on Friedman's sweeping assertion that science is to be judged by its predictive power I've had endless debates with social scientists who argue that science is to advance understanding -- that prediction alone is too narrow a standard.Read more ›