Daniel Hausman

:Contemporary behavioural economics has documented common failures of reasoning that apparently make possible policies that benefit individuals by contravening or correcting their judgements. These policies appear to be paternalistic, even though a traditional view would deny that they are paternalistic on the grounds that policies such as nudges do not restrict individual liberty. It appears to many that a new definition of paternalism that takes its cue from behavioural economics is needed. Furthermore, if one revises the definition of paternalism, one must revisit traditional views concerning whether paternalist policies are wise. In Government Paternalism, Julian Le Grand and Bill New make a valuable start, although some corrections are needed. This essay provides a general setting for revising the definition of paternalism and suggests a revised definition of paternalism.

This essay responds to the helpful criticisms of Valuing Health: Well-Being, Freedom, and Suffering, which have been offered by Elselijn Kingma, Adam Oliver, Anna Alexandrova, Alex Voorhoeve, Erik Nord and James Wilson. I am extremely grateful to Jonathan Wolf and especially James Wilson for arranging a one-day conference on my book, Valuing Health: Well-Being, Freedom, and Suffering [Hausman, D.. Valuing Health: Well-Being, Freedom, and Suffering. Oxford: Oxford University Press.], and for publishing this symposium. I am also grateful to the wonderful six scholars who took the time to study my work and to offer perceptive and helpful criticisms. Without unduly trying the patience of readers, I cannot respond to all their remarks, but I hope that in what follows I have replied to the most important of their comments on the arguments and conclusions of Valuing Health. Before I begin these replies, a brief synopsis of Valuing Health may be helpful to the reader.

Preferences are the central notion in mainstream economic theory, yet economists say little about what preferences are. This article argues that preferences in mainstream positive economics are comparative evaluations with respect to everything relevant to value or choice, and it argues against three mistaken views of preferences: (1) that they are matters of taste, concerning which rational assessment is inappropriate, (2) that preferences coincide with judgments of expected self-interested benefit, and (3) that preferences can be defined in terms of choices.

Chapter 5 is an essay on the methodology of equilibrium theory. In the course of examining recent controversies concerning lawlike claims and "assumptions" in economic theory, I reach a position similar to J. S. Mill's. Neo-classical economics is what Mill would call "a separate science." It follows a deductive method, since its basic laws supported by everyday experience. In its general equilibrium formulation, equilibrium theory possesses, however, no explanatory worth and very little explanatory importance, since its idealizations are not legitimate. General equilibrium theory ought fundamentally to be regarded as an explanation of how economic equilibrium is possible. ;In conclusion I argue that Sraffa's contribution is a legitimate form of economic theorizing. Those methodological views, like Lionel Robbins', which would proscribe the sort of piecemeal theorizing Sraffa exemplifies, are, as methodological strictures, unjustified. In fact they involve an ideological distortion. Given the weaknesses in general equilibrium theory identified in Chapters 3 and 5, one has good reason to be eclectic. The Austrian theory, despite the Cambridge criticisms, may be useful in some investigations. A much more segmented economics built around Sraffa's work may have a great deal to teach us. Theories of capital, interest and exchange value currently are underdeveloped, unsupported, and subject to ideological influence. ;In Chapter 3 one special formulation of intertemporal general equilibrium theory is examined. I argue that general equilibrium theory may be taken as a theory of the rate of interest to which the Cambridge criticisms do not apply. Puzzles remain, however, concerning both the apparently lawlike claims and the unrealistic stipulations concerning background conditions that general equilibrium theory makes. ;In Chapter 4 Sraffa's system in The Production of Commodities by Means of Commodities is presented and tentatively assessed. I argue that it is consistent with equilibrium theory, but may be combined with other claims that are not consistent with equilibrium theory. What is puzzling but, I argue, methodologically legitimate in Sraffa's work is that he takes as givens factors like the composition of output, that are themselves subject to further economic analysis. Sraffa's work, when properly understood, can prove valuable to Marxian economists. ;Chapter 1 establishes a contrast between physical cost and marginal utility theories of exchange value and examines why issues concerning capital and interest are theoretically central to both theories. I point out that physical cost theories of value are not tenable. ;Chapter 2 is concerned with simplified aggregate capital theories, especially Wicksell's Austrian theory of capital, and with the Cambridge criticisms of such theories. The Cambridge criticisms show, I conclude, that aggregative capital theories make unwarranted economic claims. ;This dissertation examines from both an economic and a philosophical perspective controversies concerning the theory of capital and interest and the relationship of capital and interest to exchange value. The fundamentals of the neo-classical and neo-Ricardian approaches to economic theory are made explicit and compared. The neo-Ricardian approach is partially defended

The risks to groups posed by research involving human beings—including genetics research—should be conceived of as a species of third-party risks. The important task of protecting third parties from the risks posed by the conduct and the findings of research should not be assigned to IRBs because they are not designed or equipped to handle such a broad responsibility. The serious problems raised by third-party risks require an integration of policy-making and regulation that is beyond the scope and competence of IRBs

The truth about health care policy lies between two exaggerated views: a market view in which individuals purchase their own health care from profit maximizing health-care firms and a control view in which costs are controlled by regulations limiting which treatments health insurance will pay for. This essay suggests a way to avoid on the one hand the suffering, unfairness, and abandonment of solidarity entailed by the market view and, on the other hand, to diminish the inflexibility and inefficiency of the control view. It suggests that the way to mitigate these problems is to recognize the malleability of motivation and the range of factors, in addition to financial incentives, that may influence the behavior of patients and especially physicians.

Constructive empiricism, Bas van fraassen's new variety of anti-Realism, Maintains that science aims at empirically adequate, Rather than true theories and that, In fully accepting a theory, One should believe only that it is empirically adequate. A theory is empirically adequate just in case it has a model in which all observable phenomena may be embedded. I challenge van fraassen's main arguments and argue that the observable/unobservable distinction will not bear the weight that van fraassen places on it

An anthology of works on the philosophy of economics, including classic texts and essays exploring specific branches and schools of economics. Completely revamped, this edition contains new selections, a revised introduction and a bibliography. The volume contains 26 chapters organized into five parts: Classic Discussions, Positivist and Popperian Views, Ideology and Normative Economics, Branches and Schools of Economics and Their Methodological Problems and New Directions in Economic Methodology. It includes crucial historical contributions by figures such as Mill, Marx, Weber, Robbins, Knight, and Veblen and works by most of the leading contemporary figures writing on economic methodology, including five Nobel Laureates in Economics.

This book offers a comprehensive overview of the structure, strategy and methods of assessment of orthodox theoretical economics. In Part I Professor Hausman explains how economists theorise, emphasising the essential underlying commitment of economists to a vision of economics as a separate science. In Part II he defends the view that the basic axioms of economics are 'inexact' since they deal only with the 'major' causes; unlike most writers on economic methodology, the author argues that it is the rules that economists espouse rather than their practice that is at fault. Part III links the conception of economics as a separate science to the fact that economic theories offer reasons and justifications for human actions, not just their causes. With its lengthy appendix introducing relevant issues in philosophy of science, this book is a major addition to philosophy of economics and of social science.

While very much in Sen's camp in rejecting revealed preference theory and emphasizing the complexity, incompleteness, and context dependence of preference and the intellectual costs of supposing that all the factors influencing choice can be captured by a single notion of preference, this essay contests his view that economists should recognize multiple notions of preference. It argues that Sen's concerns are better served by embracing a single conception of preference and insisting on the need for analysis of the multiple factors that determine ‘preference’ so conceived.

This paper makes a modest point. Suppose one wants to evaluate alternative policies, institutions or even constitutions on the basis of their consequences. To do so, one needs to evaluate their consequences and one needs to know what their consequences are. Let us suppose that the role of economic theories and game theory in particular is mainly to help us to use information we already possess or that we can acquire at a reasonable cost to judge what the consequences will be. We do not necessarily need true theories or theories that provide perfectly precise predictions. What sort of accuracy and precision we need depends on how the consequences of alternative policies are evaluated. The worth of an economic theory in this context of policy assessment depends on the accuracy of the predictions the theory permits, the costs of gathering the needed information, and the costs of learning and using the theory. My only excuse for uttering these truisms is that well known economists and philosophers have denied them