Pawel Ciompa and the Meaning of Econometrics: A Comparison of Two Concepts

Abstract

Pawel Ciompa’s conception of econometrics is compared with the modern mainstream interpretation of the term that originated with Ragnar Frisch and other members of the Econometric Society. Ciompa was the first to use the German language term “Oekonometrie” in 1910, sixteen years prior to Frisch, who used the French equivalent “économétrie”. Ciompa conceived of econometrics as being entirely descriptive. He considered it to be a set of tools for facilitating the conveyance of information in the field of accounting. In contrast, Frisch regarded it as a quantitative approach to economic theorizing, i.e. as the unification of economic theory, mathematics and statistics. A justification for applying the latter conception of econometrics requires methodological and epistemological considerations, whereas applying the former conception is merely a matter of style. However, a satisfactory justification for applying econometrics in the commonly accepted sense is lacking, and strong arguments against it have been brought forward among others by economists of the Austrian School. The argument that the constancy principle is not satisfied in the field of economics is illustrated by means of a computer simulation. I conclude that modern econometrics should be pushed back towards the descriptive character that Pawel Ciompa originally attached to the term.

Keywords: Pawel Ciompa, Ragnar Frisch, Econometrics, History of Economic Thought

JEL Classification: B16, B23, B31