Essays in Positive Economics

Normative judgments frequently involve implicit predictions about the consequences of different policies.

Rather a theory (or hypothesis) must be judged by its: In a famous and controversial passage, Friedman writes that: This is because such hypotheses and descriptions extract only those crucial elements sufficient to yield relatively precise, valid predictions, omitting a welter of predictively irrelevant details.

Still, Melvin Reder writes that a significant minority of Chicago-school economists such as Ronald Coase and James M. Buchanan have written as if "the validity of an economic theory lies in its intuitive appeal and/or its compatibility with a set of common-sense axioms rather than the conformity of its implications with empirical observation.

He defends against this by requiring only certain phenomena of interest to be explained, but as Samuelson pointed out, this can lead to unscientific cherry-picking of results.

"[6] He later noted that its influence was waning due to an empirical turn in economics that took place at the end the century, although by 2012 it still commonly served "as a way of avoiding awkward questions concerning simplifications, idealizations, and abstraction in economics rather than responding to them.