“To be sure, any theoretical model must be abstracted ‘from the richness and complexity of behavior.’ However, abstraction becomes falsification when it so simplifies human behavior as to leave it unrecognizable and unexplained.” Explain

Please provide the best answer for the statement.

Critics of some economic theories make statements such as this. Their concern is that if economists simplify their theories too much, they may be testing hypotheses that will be unworkable in the real world, even if they cannot be rejected as false. For example, if one attempted to explain all human behavior as directed toward profit maximization, much of our emotional and irrational behavior would be unrecognizable and unexplained. However, attempts have been made to explain everything from love and marriage to child bearing as a result of conscious economic decision-making. If we exaggerate the impact of rational, economic thought, we are really falsifying reality. On the other hand, we should not neglect the impact of economic reasoning on human behavior.

Economics

You might also like to view...

Typical structure characteristics of interest to Industrial Organization researchers include

a. Barriers to entry b. Product differentiation among firms c. The number and size distribution of firms d. All of the above

Economics

When people hold money to transact purchases they expect to make, this is known as the:

a. precautionary demand for money. b. liquidity demand for money. c. spending demand for money. d. speculative demand for money. e. transactions demand for money.

Economics