Economics and Philosophy

This course examines some of the ways in which economics as a social science is related to philosophy. We start with a discussion of the definition, scope, and methodology of economics, reading Robbins on the definition of economics, Mill on the science of political economy and Friedman’s essay on methodology, along with some of its critical responses. We then consider three central concepts of economics which have their roots in philosophy: rationality, utility, and welfare, and we examine the philosophical assumptions in each of these economic concepts. 

Economics assumes a form of instrumental rationality by which individuals seek to maximize their utility. We consider the origins of this concept of rationality, its extension into rational choice theory, and the critiques it has inspired. Our next topic is the concept of utility, which originates in philosophy but which receives a technical definition in economics. Finally, we turn to welfare economics, which is the most normative part of economic science, where we consider topics such as preference satisfaction and interpersonal comparisons of utility. We also raise the question throughout whether these concepts are rightly used in economics, and whether welfare economics can in fact promote well-being. 

In addition to the four major topics (methodology, rationality, utility, and welfare), we will also devote two classes to each of four topics debated in journal articles by some of the most important economists in recent history. These topics are:

•  Is underinvestment in basic research a market failure? (Arrow v. Demsetz); 
• What are the market consequences of imperfect information? (Hayek v. Stiglitz); 
• What are the moral dimensions of economic growth, specifically as it relates to the environment? (B. Friedman v. T. Jackson); and 
• Is it ethical for the state to “nudge” citizens towards desired behaviors? (Thaler and Sunstein v. Grüne-Yanoff). 

Reviewing the views expressed in these debates will allow students to form their own opinions on major topics in economics where the arguments are largely 1 philosophical. The overall goal of the course is to help students develop a more critical understanding of the assumptions of economics as it’s practiced as a social science.