Kenneth Arrow quote: “Certainly, there is no general principle that prevents the creation of an economic theory based on other hypotheses tha…”

“Not only is it possible to devise complete models of the economy on hypotheses other than rationality, but in fact virtually every practical theory of macroeconomics is partly so based. The price- and wage- rigidity elements of Keynesian theory are hard to fit into a rational framework, though some valiant efforts have been made. … But if the Keynesian model is a natural target of criticism by the upholders of universal rationality, it must be added that monetarism is no better. I know of no serious derivation of the demand for money from a rational optimization. … The use of rationality in these arguments is ritualistic, not essential.”

Kenneth Arrow (1921–2017) American economist

1970s-1980s, "Rationality of Self and Others in an Economic System", 1986

“The principles of the theory of probabilities [cannot] serve to guide us in the election of… [scientific] hypotheses.”

George Boole (1815–1864) English mathematician, philosopher and logician

Source: 1850s, An Investigation of the Laws of Thought (1854), p. 375, as cited in: Lev D. Beklemishev (2000) Provability, Computability and Reflection, p. 432

“There is no reason why an extraphysical general principle is necessarily to be avoided, since such principles could conceivably serve as useful working hypotheses.”

David Bohm (1917–1992) American theoretical physicist

Context: There is no reason why an extraphysical general principle is necessarily to be avoided, since such principles could conceivably serve as useful working hypotheses. For the history of scientific research is full of examples in which it was very fruitful indeed to assume that certain objects or elements might be real, long before any procedures were known which would permit them to be observed directly.

“General relativity is certainly a very beautiful theory, but how does one judge the elegance of physical theories generally?”

Roger Penrose book Fashion, Faith, and Fantasy in the New Physics of the Universe

Ch. 1, Mathematical Elegance as a Driving Force, p. 7 https://books.google.com/books?id=T09kCwAAQBAJ&pg=PA7.
Fashion, Faith, and Fantasy in the New Physics of the Universe (2016)

“There [is]… a list of five tests which any body of doctrine which aspires to the name of economic theory must be able to meet:
1. Economic theory should unify economic science. - The task of a general body of theory in any subject is to give unity to its investigations…
2. Economic theory should be relevant to the modern problem of control. - Students of economics should spend their efforts upon subjects worth investigation…
3. The proper subject-matter of economic theory is institutions. - The demand that economic theory relate to institutions is implicit in the plea for its relevancy…
4. Economic theory is concerned with matters of process. - If economic theory is to treat of institutions it must know both the kinds of things institutions are and the kinds of things they are not…
5. Economic theory must be based upon an acceptable theory of human behavior.”

Walton Hale Hamilton (1881–1958) Yale Law Professor

After all control and institutions and processes are immediate things. They can all be translated into terms of human conduct...
Source: The Institutional Approach to Economic Theory, 1919, p. 311-6

“The existence of analogies between central features of various theories implies the existence of a general theory which underlies the particular theories and unifies them with respect to those central features. This fundamental principle of generalization by abstraction was enunicated by the eminent American mathematician E. H. Moore more than thirty years ago. It is the purpose of the pages that follow to work out its implication for theoretical and applied economics.”

Paul A. Samuelson book Foundations of Economic Analysis

Source: 1940s, Foundations of Economic Analysis, 1947, Ch. 1 : Introduction

“Of a number of variant hypotheses about the same facts, that one is true which shows why facts, which in the other hypotheses remain unrelated, are as they are, i. e., which demonstrates their orderly and rational mathematical connexion.”

Johannes Kepler (1571–1630) German mathematician, astronomer and astrologer

Vol. I, p. 238
Joannis Kepleri Astronomi Opera Omnia, ed. Christian Frisch (1858)

“While economic theory in general may be defined as the theory of how an economic condition or an economic development is determined within an institutional framework, the welfare theory deals with how to judge whether one condition can be said to be better in some way than another and whether it is possible, by altering the institutional framework, to achieve a better condition than the present one.”

John Hicks (1904–1989) British economist

Kenneth Arrow and John Hicks (1972) From Nobel Lectures, Economics 1969-1980, Editor Assar Lindbeck, World Scientific Publishing Co., Singapore, 1992 ( online http://www.nobelprize.org/nobel_prizes/economics/laureates/1972/presentation-speech.html)

“While economic theory in general may be defined as the theory of how an economic condition or an economic development is determined within an institutional framework, the welfare theory deals with how to judge whether one condition can be said to be better in some way than another and whether it is possible, by altering the institutional framework, to achieve a better condition than the present one.”

Kenneth Arrow (1921–2017) American economist

Arrow and Hicks (1972) From Nobel Lectures, Economics 1969-1980, Editor Assar Lindbeck, World Scientific Publishing Co., Singapore, 1992 ( online http://www.nobelprize.org/nobel_prizes/economics/laureates/1972/presentation-speech.html)
1970s-1980s

“Even though principles of rationality seem as often violated as followed, we still cling to the notion that human thought should be rational, logical, and orderly. Much of law is based upon the concept of rational thought and behavior. Much of economic theory is based upon the model of the rational human who attempts to optimize personal benefit, utility, or comfort. Many scientists who study artificial intelligence use the mathematics of formal logic—the predicate calculus—as their major tool to simulate thought. […] Human thought is not like logic; it is fundamentally different in kind and spirit. The difference is neither worse nor better. But it is the difference that leads to creative discovery and to great robustness of behavior.”

Donald A. Norman book The Design of Everyday Things

Source: The Design of Everyday Things (1988, 2002), Ch. 5, pp. 114–115.

“Certainly, there is no general principle that prevents the creation of an economic theory based on other hypotheses than that of rationality.”

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