NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

The Positive Economics of Methodology

James A. Kahn, Steve Landsburg, Alan C. Stockman

NBER Technical Working Paper No. 82
Issued in November 1989
NBER Program(s):   EFG

Does an observation constitute stronger evidence for a theory if it was made after rather than before the theory was formulated, when it may have influenced the theory's construction? Philosophers have discussed this question (of "novel confirmation") but have lacked a formal model of scientific research and incentives. The question applies to all types of research. One example in economics involves evaluating models constructed on the basis of VARs (where a researcher looks at evidence and then constructs a theory) versus structural models with formal econometric tests (where a model is constructed before some of the evidence on it is obtained). This paper develops a simple model of scientific research. It discusses the issues that affect the answer to this question of the timing and theory-construction and observation or experimentation. We also address issues of social versus private incentives in the choice of research strategies, and of socially optimal rewards for researchers in the presence of information and incentive constraints.

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Document Object Identifier (DOI): 10.3386/t0082

Published: Kahn, James A., Steven E. Landsburg and Alan C. Stockman. "The Positive Economics Of Methodology," Journal of Economic Theory, 1996, v68(1,Jan), 64-76.

 
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