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Hume: The Power of Abduction and Simple Observation in Economics

Serie Documentos de Trabajo, Documento Nro. 417

33 Pages Posted: 23 Mar 2010  

Jorge M. Streb

Universidad del CEMA

Date Written: March 2010

Abstract

In Hume’s epistemology, induction leads to discovery in matters of fact. However, because of the poor data Hume analyzes the balance of trade with a thought experiment, doing what Mill makes explicit afterwards: reason from assumptions, to reach conclusions which are true in the abstract. Hume’s potential explanation, what Peirce later calls abduction, is backed by a case study, the price revolution of the 16th century, which supports half his abductive inference, when money supply is multiplied fivefold. Given that economics reasons abductively, Hume’s attention to realistic hypotheses and the adjustment process matters.

Keywords: abduction, case study, realistic assumptions, Hume, Mill, Peirce, Hayek, Akerlof

JEL Classification: B1, B4, E4, E5, F1

Suggested Citation

Streb, Jorge M., Hume: The Power of Abduction and Simple Observation in Economics (March 2010). Serie Documentos de Trabajo, Documento Nro. 417. Available at SSRN: https://ssrn.com/abstract=1572867 or http://dx.doi.org/10.2139/ssrn.1572867

Jorge Miguel Streb (Contact Author)

Universidad del CEMA ( email )

Av. Cordoba 374
Buenos Aires, CABA
Argentina

HOME PAGE: http://www.ucema.edu.ar/u/jms/

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