Bryan Caplan  

Are Austrians Anti-Empirical?

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Steve Horwitz has the lead Cato Unbound essay this month.  His topic: "The Empirics of Austrian Economics."  My response goes up Friday.  For now, here's Steve:
[I]t is not the case, as Josh Barro recently argued, "that Austrian economists reject empirical analysis, and instead believe that you can reach conclusions about correct economic policies from a priori principles." To say so is to misinterpret what Mises meant by the word praxeology and therefore fail to understand what he recommended as the appropriate methods for economists. It is also to rely on interpretations of what people like Mises and Rothbard had to say, as well as the pronouncements of various advocates of Austrian economics on blogs and Internet forums, rather than engaging with the professional research being published in the peer-reviewed journals by practicing Austrians.
On the contrary:
Subjectivism also explains Austrian skepticism about statistical correlation being the privileged form of empirical evidence. It only provides correlation, and to provide causation requires a theoretical explanation. If such explanations must start with actors' perceptions of the world, then forms of empirical evidence that capture such perceptions would be at least as useful. Austrians therefore frequently turn to primary source material and interview and survey work as well as quantitative data to tell a complete story of how a particular economic phenomenon came to be and functioned.
For example:
Perhaps the most thorough and effective empirical work by Austrians in recent years is that associated with the Mercatus Center's research project on Hurricane Katrina. Starting with a whole series of interviews conducted with Gulf residents as well as deep investigation into the events before and after the storm, Austrians produced a number of papers exploring the role of local communities and the private sector in generating recovery. Principal investigator Peter Boettke was lead author on an overview article (Boettke et. al., 2007) that appeared in the mainstream Southern Economic Journal. That piece along with the book by Emily Chamlee-Wright (2010), as well as her Rationality and Society article with Virgil Storr (Chamlee-Wright and Storr 2009), and articles by Lesson and Sobel (2007) and Horwitz (2009) exemplify this work.[5] The core insights of this work about the effectiveness of community and private recovery efforts have significantly influenced the post-Katrina narrative, arguably because they were based so thoroughly in the data generated by the interviews and the careful treatment of history.
I'll save my critique for Friday.


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COMMENTS (3 to date)
david writes:

It's very difficult to distinguish neoclassical new-institutionalist economics from the empirical Austrian economics that Horwitz describes... NIE is older, too, it dates to the 1970s.

I think Horwitz should be more straightforward that the Boettke's school adapted a neoclassical program in order to advance. Yay for Boettke's pluralism and all, but these are not 'core Austrian ideas'. Rather Austrians gave up any hope that denying that human choice can be realistically captured in a model would result in a productive research programme, and leapt into the chasm of microfoundations, game theory, & constrained optimization.

(I suppose an ideal Horwitz-Austrian theoretical result would be some general explanation for non-desirability in centralizing information given individual limits on knowledge and optimization. Some kind of information aggregation result?)

RPLong writes:

Good economics is good economics. What does it matter what "team" the economists belong to?

As for whether Austrians are anti-Empirical, Mises was a critic of Mathematical Economics as a school of thought, i.e. the old Soviet Union mathematician/economists. That is a very mainstream position, no?

It was not until Rothbard that "Austrians" started rejecting mathematics in economics. That perspective was poorly argued nonsense that no one except the Rothbard dogmatists take seriously. I blogged about it once.

Jonathon Hunt writes:

http://bastiat.mises.org/2012/09/reply-to-the-empirics-of-austrian-economics/

Daniel J. Sanchez cleared up Horwitz's mistakes pretty nicely, IMO.

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