On J M Keynes's Rejection, in General, of Ramsey's Subjective Theory of Probability: The Keynes–Townshend Exchanges of 1937 and 1938
37 Pages Posted: 13 Jan 2017
Date Written: January 13, 2017
J M Keynes rejected Ramsey’s subjective theory of probability in general. He did accept Ramsey’s betting quotient approach in the special case where the weight of the evidence, w, equaled one so that all the probabilities were linear, additive, precise, exact, definite, single number answers. In general, Keynes’s probabilities were indeterminate, interval valued probabilities that were non additive and nonlinear because the weight, w, was less than 1. F.Y. Edgeworth, Bertrand Russell, and Edwin Bidell Wilson all recognized the interval valued nature of Keynes’s probabilities (See my Reviewing the Reviewers of Keynes’s A Treatise on Probability, 2016).
The Keynes – Townshend exchanges provide incontrovertible evidence that Keynes never accepted Ramsey’s subjective approach to probability because there was no place in that theory for interval valued probability or for the concept of the weight of the evidence, since, for Ramsey, the subjective estimate of a degree of belief is the confidence a decision maker has in the betting odds while for Keynes, it is the degree of rational belief, not the degree of belief.
The Keynes –Townshend exchanges, if carefully read and digested, contains the relevant evidence that allows a reader to conclude that Keynes remained an adherent practitioner of his theory of logical probability his entire life. He never changed his mind.
Overlooking the Keynes – Townshend exchanges of 1937-38 explains why economists and academicians have failed to see the close connections that exist between the GT and TP.
Keywords: Townshend- Keynes correspondecne 1937 -38, weight of the evidence,non numerical probabilities
JEL Classification: B20, B22, B14, B20, B22
Suggested Citation: Suggested Citation