"An economic theorist who offers a model prepares the ground for a practitioner who should employ her judgment in using this model; but the theorist's contribution falls short of a testable prediction." (Gilboa, et. al. 11)
"Cases can never be refuted, and case-based reasoning is thus an attractive alternative to rule-based reasoning, allowing economists to work with models simple enough to be useful without worrying about refutations." (Gilboa, et. al. 27) [HT: Jong Jae Lee]
The two passages above are quoted from a paper "Economic Models as Analogies" forthcoming in the Economic Journal by a group of leading economists.* It represents part of a wider trend among economists re-interpreting their own activity (recall last week's post); in doing so, they are also making more sensible claims on behalf of economics, while trying to keep most of the economist's tool-kit intact (recall this post). Both passages reveal how thoughtful economists' are trying to come to grip not just with the charge that their models are not realistic (as noted throughout the opening sections of the paper), but with the widespread perception that their models have been refuted in the events of the last decade. While a cynic might interpret the two passages above as a belated admission that something was refuted in 2008, the significance of these passages is to be found in the renewed focus on judgment.