The article discusses Friedman's classic claim that economics can be based on irrealistic assumptions. It exploits Samuelson's distinction between two "F-twists" (that is, "it is an advantage for an economic theory to use irrealistic assumptions" vs "the more irrealistic the assumptions, the better the economic theory"), as well as Nagel's distinction between three philosophy-of-science construals of the basic claim. On examination, only one of Nagel's construals seems promising enough. It invo…
Read moreThe article discusses Friedman's classic claim that economics can be based on irrealistic assumptions. It exploits Samuelson's distinction between two "F-twists" (that is, "it is an advantage for an economic theory to use irrealistic assumptions" vs "the more irrealistic the assumptions, the better the economic theory"), as well as Nagel's distinction between three philosophy-of-science construals of the basic claim. On examination, only one of Nagel's construals seems promising enough. It involves the neo-positivistic distinction between theoretical and non-theoretical ("observable") terms; so Friedman would in some sense argue for the major role of theoretical terms in economics. The paper uses a model-theoretic apparatus to refine the selected construal and check whether it can be made to support the claim. This inquiry leads to essentially negative results for both F-twists, and the final conclusion is that they are left unsupported.