Theory Choice in Economics: Philosophy and Practice
It is generally accepted that the construction and use of theories is an essential and ineliminable aspect of the pursuit of scientific knowledge.' It is also widely recognized that for any given phenomenon under study, there exist alternative theoretical frameworks by which it may be investigated. The question arises: How does one choose among such alternative frameworks in cases when two or more theories are offered in explanation of the same phenomenon?2 Is choice in such matters an entirely subjective affair, or are there objective criteria by which alternative theoretical constructions may be compared, evaluated, and ultimately ranked? In a phrase, does a set of canons for the rational appraisal of theories exist in science? The usual answer is that such canons do indeed exist, that there are well-known procedures for weighing the comparative strengths and weaknesses of competing theories. The criteria employed for theory choice are often divided into two categories: empirical and nonempirical or logical. Empirical criteria which have been popular with economists have been of two sorts: the examination of a theory's assumptions for testability and