Title: Why realism and methodological pluralism matter for robust research and public policy: perspectives from behavioural economics
Authors: Morris Altman
Addresses: School of Business, University of Dundee, 1-3 Perth Road, Dundee, Scotland, UK
Abstract: Conventional economics maintains that a critical test of the veracity of robust economic theory is its capacity to generate plausible economic predictions, irrespective of the realism of the theories' underlying assumptions. This methodological argument even holds for relatively less conventional approaches to economics such as behavioural, heterodox, experimental, and institutional. Following upon research in behavioural economics, I argue that such a methodology can easily result in the illusion of causality, the omission of potentially key variables, and closing the doors to key analytical questions as well as to publication bias. This generate perverse analytical results, with severe consequence for public policy. I argue that methodological pluralism is critical to the construction of robust economic theory, irrespective of ones' political orientation. Examples are drawn from financial markets, labour markets, and macroeconomics to illustrate this pluralistic perspective to economic analyses.
Keywords: methodological pluralism; behavioural economics; public policy; assumptions; realism; analytical predictions; publication bias.
International Journal of Pluralism and Economics Education, 2020 Vol.11 No.2, pp.130 - 148
Received: 31 Oct 2019
Accepted: 19 Jul 2020
Published online: 17 Nov 2020 *