What makes economics a separate science?

Hausman’s characterization of the theoretical core of economics, which he labels ‘equilibrium theory’–utility theory, consumer choice and the theory of the firm–is mistaken as it does not include the proof of the existence of a Pareto-optimal general equilibrium. Hausman’s enumeration of various other ‘general equilibrium’ theories and models in economics understates the role of the Arrow–Debreu (and subsequent proofs of) general equilibrium as the organizing principle of theoretical economics. The paper outlines the role of this proof in various branches of economics, including (new classical) macroeconomics and growth theory. Hausman recognizes the problematical character of Arrow–Debreu general equilibrium, and seeks to restrict its relevance to the rest of economics by invoking the Sonnenschein-Mantel-Debreu ‘anything goes’ theorem. This theorem’s impact on the employment of the Arrow–Debreu model to organize economic theory is limited. Hausman’s unfavorable verdict on the theorem in turn casts doubt on his analysis of economics as a separate science.

Duke Scholars

Author Alexander Rosenberg Philosophy