Weberian Perspective on Value Judgements in Economic Models
Weberian Perspective on Value Judgements in Economic Models

an Application to Methodological Value Judgements Contained in the Austrian Business Cycle Theory and the Real Business Cycle Theory

Summary/Abstract: The paper aims to apply a simple “model of a model”, presented in detail in a companion paper, which draws on Max Weber’s discussion of values in social sciences. The argument in that paper was that to compare economic models in a thorough way, one should include in such comparisons value judgements expressed or assumed in these models. So, our “model of a model” should include these judgements, which is not common in the literature on economic modeling. The value judgements can be roughly divided into methodological and evaluative judgements, the latter concerning desirable policies, ethical issues, etc. In this paper the focus is on the former. Therefore, a case study is presented to show how some differences between the models in the Austrian Business Cycle Theory and the Real Business Cycle theory can be traced to the methodological value judgements embedded in those models. These include the differing understanding of what the science of economics should look like, and choices between realisticness and simplicity. Some comments are also provided about the evaluative judgements in economic models.

• Details
• Contents