Does Neoclassical Econometrics Have a Scientific Foundation? A Critique Based on Hollis and Nell

Abstract

The 2008 global financial crisis has rekindled the debate over the scientific foundations of neo-Classical econometrics. Neo-Classical based econometrics interprets whatever it sees as individuals choosing with some degree of (perhaps bounded) rationality. It simply relates observables to one another, putting choices and actions together into equilibrium patterns. But is this methodology of neo-Classical economics an adequate foundationfor structural econometrics? To answer this question the paper reconsiders Hollis and Nell’s examination of the relationship between positivism and the methodology of neo-Classical economics. The paper then goes on to determine whether or not, and in which sense, the Hollis and Nell’s (1975) Framework can be considered as “foundations” for a reconstruction of structural econometrics. The paper further extends and develops the position exposed by Hollis and Nell (1975)’s Rational Economic Man and, inspired by a novel re-reading of Haavelmo’s Manifesto (1944), compares the two works, arguing that there are good reasons for considering Hollis and Nell’s (1975) framework as “foundations” for reconstructing structural econometrics, extending the original ideas of Haavelmo’s (1944) work.

Keywords

• conceptual analysis
• cross sectional approach
• deduction
• economic methodology
• empiricism
• fieldwork approach