Just So Stories: Posnerian Economic Methodology

69 Pages Posted: 26 Jun 2000  

Jeanne L. Schroeder

Yeshiva University - Benjamin N. Cardozo School of Law

Date Written: June 2000


Professor Schroeder examines the methodology that Judge Richard Posner claims to follow in his economic analysis and the methodology which he actually follows in developing his account of economic rationality. Posner presents his methodology as being economic in nature. He states that, in science and economics (and, presumably, in law) theories must be instrumental in nature. The only appropriate purpose of an economic theory is prediction. In contrast, Schroeder shows that not all scientists, let alone economists, agree with this assessment. Although theory can have useful applications, science should not be reduced to engineering. Consequently, many scientists and economists seek such alternate goals as description, explanation, and understanding.

Posner concentrates on the goal of prediction because he sees law and economics as a form of policy science. He wishes to use the law to manipulate behavior in order to further a societal goal such as wealth maximization. According to Posner, not only do legal subjects act as rational utility or wealth maximizers, the law should incentivize subjects to so act. In contrast, speculative theory and critical legal theory seek not so much to predict but to understand the law. Whereas Judge Posner identifies with the legislator or judge subjecting the law onto individuals, the critical theorist identifies with the attorney who advises and represents the individuals who are subjected to the law. Posner seeks to make individuals fit the objective criteria of the law. The critical theorist seeks to understand how she and others fit in within the legal system in order to free herself from its manipulation and, if possible, manipulate the law for her own subjective purposes.

Posner identifies his methodology with the widely adopted scientific methodology of falsification. Once again, not all philosophers, scientists or economists (let alone legal theorists) agree that falsification is the only appropriate methodology or even that it is appropriate at all. Nevertheless, it is certainly a widely accepted one. Posner does not, however, draw directly from the extensive literature of scientific methodology but bases his brief methodological discussions on Milton Friedman's notorious essay, The Methodology of Positive Economics. Prof. Schroeder briefly describes Friedman's thesis and discusses the avalanche of justifiable criticism it has received. She shows that Posner concentrates precisely on the most idiosyncratic and least accepted portions of Friedman's work - what his opponents call the F-twist or the unreality principle. Indeed, Posner gives the F-twist an additional turn of the screw, taking it to a logical extreme that perhaps should be christened the P-twist. Because Posner claims to follow the methodology known as falsification, Prof. Schroeder gives a brief discussion of standard account of falsification developed by Karl Popper and shows how Posner confuses falsification with the disreputable methodology of verification. Consequently, although Posner accuses his critics of proposing ad hoc non-falsifiable hypotheses, Posner can be just accused of precisely the same sin.

JEL Classification: D00

Suggested Citation

Schroeder, Jeanne L., Just So Stories: Posnerian Economic Methodology (June 2000). Cardozo Law School, Public Law Working Paper No. 013. Available at SSRN: https://ssrn.com/abstract=229874 or http://dx.doi.org/10.2139/ssrn.229874

Jeanne L. Schroeder (Contact Author)

Yeshiva University - Benjamin N. Cardozo School of Law ( email )

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New York, NY 10003
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