1A possible misunderstanding must be addressed at the outset. In this book, Don Ross offers his philosophy of economics, not a survey of an area of contemporary philosophy that is conventionally referred to as philosophy of economics. Ross is explicit about that (Author’s preface, x). In consequence, the book is an outlier as a title in the series Palgrave Philosophy Today, a series “meant to help all philosophers, established and aspiring, to understand, appreciate and engage with the intricacies which characterize all the many faces of philosophy” (Series Editor’s Preface, xiv). It is not the advanced textbook that one expects. This mismatch has two mildly unfortunate implications. First, the market remains undersupplied in textbooks on the philosophy of economics. As Ross recognizes, there is not much, that is “truly up-to-date” (xi)—he points to Reiss (2013) and we can add Boumans and Davis (2016). Second, because it is packaged as a textbook, Ross’s important contribution risks not being recognized as what it is. At a minimum, the book would have benefited from a subtitle to lure potential readers.
2My suggestion for a (perhaps too long) subtitle is ‘The proper place of economics in the ongoing construction of the scientific worldview’. This subtitle would have indicated the orientation of the whole book. First, Ross’s philosophy of economics is about economics as a science. It is part of philosophy of science. In consequence, other topics at the intersection of philosophy and economics—e.g., the foundations of decision theory, the relationships between economics and moral philosophy—are discussed only incidentally. As part of a philosophy of science oriented toward economics, one is tempted to group it with older books such as Alexander Rosenberg’s Microeconomic Laws: A Philosophical Analysis (1976) and Daniel Hausman’s The Inexact and Separate Science of Economics (1992).
3Yet, and this is the second aspect flagged by the suggested subtitle, Ross sets out to do something unlike these earlier efforts. He does not seek a ‘philosophical analysis’ of the general concepts and modes of reasoning of economists. He is especially critical of what he sees as the “unreasonable ambitions” (5) motivating much philosophy of science up to today. Many philosophers, allegedly having “expertise on a general ‘logic of concepts’” (5), want to analyze how economics works. Even more “grandiose”, they want to assess whether economics works properly according to “universal and general norms of thought” (5-6). In contrast, Ross aims at identifying the subject matter of economics. His main question is: “What is economics fundamentally about?” (x)
4Third, the book works from the premise that economics does not offer a perspective on the world fundamentally disjoint from other scientific perspectives. Ross grants that it might not be clear at a given point in time how the cognitive contributions of various scientific disciplines “‘fit together’ into a coherent whole” (6), but he believes that “[i]t is the mission of scientific institutions to strive to provide a complete objective account of the universe at all scales of description.” (x) This stance is obviously opposed to a radical Kuhnian interpretation of the sciences as being divided into incommensurable paradigms. More importantly, it goes against the position of many contemporary philosophers of science who reject the Unity of Science project—e.g., John Dupré, Nancy Cartwright, Ronald Giere and even Philip Kitcher who advocates a “modest unificationism” (Kitcher, 1999). As my suggested subtitle indicates, Ross grants that the scientific worldview is under construction, but there is for him only one scientific worldview. He even claims that the existence of this ongoing unifying process is where philosophy of science finds its only raison d’être. Individual scientists are best placed to characterize what they work on. Generalists in a discipline—e.g., authors of introductory textbooks—are most probably best placed to tell what a discipline, taken in isolation, is generally about. What is left for philosophers of science is to explicitly place each discipline on the full map of science. In the case of economics, the goal is to specify what the discipline is about in relation to other disciplines. One might object that this task is more properly the one of historians of science. Ross replies that historians are incentivized to be backward looking while we also need forward-looking scholars who attempt to grasp the structure of the scientific worldview in the process of its construction (12). These scholars—philosophers of science who understand their place in the division of cognitive labor—should have “a special focus on interdisciplinary unification” (13).
5My suggested subtitle alludes to a last aspect of the orientation of Ross’s book: its prescriptive character. Ross does not mainly aim at describing how economics relates to neighboring disciplines; he wants to argue for what he takes to be the proper place of economics (18, 28). This goal leads him to selectively emphasize certain types of research done by scholars who would self-identify as economists. He employs this strategy in chapter 2, in which he tells his history of “economics and its neighbors before 1980” (25-96) and again in chapter 3 in which he highlights what he takes to be the most significant recent developments. For him, the marginalism of the late 19th century is the origin of an erroneous interpretation of the proper place of economics. I cite an extract with telling metaphors:
[S]ome non-essential marginalist assumptions about the nature of subjectivity turned out to be a Trojan horse, infusing a subtle pathogen into people’s understanding of economic theory that has recently metastasized into a campaign for wholesale displacement of economics by psychology and neuroscience (28-29).
6There is thus a cancer in economics which is rooted in a mistaken interpretation of what economics is fundamentally about. Ross is explicit about the nature of such a diagnosis. He writes: “I am not stating a matter of fact” (28). He wants to convince us that some recent turns in economics are akin to cancers from which the discipline must be cured.
7So, what is economics really about according to Ross or, perhaps more appropriately, what ought it be about? It is “ultimately the scientific study of markets.” (100) Ross characterizes the scientific mission of economics thus:
Discovering generalizations about ways in which relative, aggregate changes in market valuations are influenced by changes in institutions, technology and demographics, as channeled through incentives, is the basic business of economics (32).
8As is often the case, the best way to explicate these definitions is by a negative characterization—i.e., by specifying what Ross explicitly rejects while advocating these definitions. I will present two targets of his criticisms.
9The first target, which is not the main one, is the wave of empirical research using either randomized controlled trials or “pseudo-experimental randomization” (185) based on instrumental variables. What disturbs Ross the most in this wave is the frequently associated disdain for economic theory. For instance, Angrist and Pischke (2010, 23) state that “[i]n a design-based framework, economic theory helps us understand the picture that emerges from a constellation of empirical findings, but does not help us paint the picture.” Ross vehemently criticizes this position: “a science that abandons its theory invites degeneration and loss of generality and epistemic power” (186). According to him, the econometric estimation of structural models—i.e., models explicitly built on economic theory—should remain a core empirical method in economics. Ross thus positions himself as a defender of an established mainstream approach to empirical economics against a newer mainstream approach calling for a withdrawal from economic theory.
10His second target is another recent mainstream approach: behavioral economics. This approach is what Ross takes to be a ‘cancer’ in contemporary economics. In chapter 4, Ross rightly points out that the dominant narrative accompanying behavioral economics is that it makes the discipline progress because it replaces a mistaken theory of individual choice—rational choice theory. According to the usual story, psychological evidence overwhelmingly rejects this theory of choice as an accurate description of human choices in economic as well as other settings. Furthermore, behavioral economists maintain that they supply alternatives—new models of choice that are more descriptively accurate and conducive to improvements in explanatory and predictive powers. According to this narrative, the future place of economics among the sciences is in an entanglement with psychology.
11Ross argues that this narrative grossly misrepresents the role of choice theory in economics. The discipline has been primarily interested in market-level variables. These variables are “subject to choice” in the specific sense that they are “sensitive to changes in relevant incentives—typically shifts in opportunity costs at the market or population level.” (238) This understanding of choice must be distinguished from the one once prevalent in cognitive science: choice being the outcome of a computation from which one alternative comes out the winner. This crucial distinction between two definitions of choice is obscured by how economics is usually taught: rational choice theory is typically presented as being about “stylized individual people” (238) who have well-behaved preferences that, once combined to their beliefs, cause them to choose. The first mistake in this presentation is that preferences are better interpreted in economics “as summaries of, rather than causes of, economic choices” (201). Since Samuelson’s theory of revealed preferences, economists have a framework to rigorously talk about preferences without being thereby committed to a theory about the cognitive processes that give rise to actions. The other mistake is that the bulk of economics has little to do with individual-level phenomena: both the explandum and the explanans are at collective scales. The widespread opposite belief among economists—who have long “marinated in the rhetoric of methodological individualism”—can be explained by “a lazy tendency to not reflect carefully on what they, as economists, actually do.” (237)
12These points might not be expressed often enough, but they are not novel. The distinctive and important contribution of Ross on the topic is his explanation of why economic analysis in terms of choice works for market phenomena: propositional attitudes such as preferences are not internal to human individuals, but have an external reality in socially structured interactions because participants, in an attempt to coordinate their actions, model others and ultimately themselves as having these propositional attitudes (245-246). This explanation draws on Daniel Dennett’s highly influential view of the intentional stance: “minds and their elements—including beliefs and preferences—are virtual objects constructed collectively by people who must coordinate their expectations in the face of massive informational complexity” (252-253).
13This explanation of the soundness of standard economic analysis works well with Ross’s position that there is only one scientific worldview in the making. Unlike some opponents to behavioral economics (e.g., Gul and Pesendorfer, 2008), he does not maintain that psychological questions about how minds work should be indifferent to economists, that the two realms are disjoint. His “intentional-stance functionalism” (245) offers instead an understanding of the mind that accounts for the soundness of economic analysis in the study of some structured interactions.
14What are the types of structured interactions for which standard economic analysis is sound? Ross’s answer in one word is “markets”. Unfortunately, the scope of this concept in Ross’s writing is not clear. In the first chapters, he seems to be working with a narrow definition of markets as structures in which interactions between potential buyers and sellers reveal information about relative scarcity through prices (e.g. 36, 101). Markets in these chapters are thus understood in a Hayekian fashion. Later, he seems to accept a broad definition: “anything modeled with game theory” (290). Obviously, some structures that can be modeled with game theory are not markets in the narrow sense.
15This ambiguity on the concept of markets has repercussions on the overall coherence of the book. In his argument against the entanglement of economics with psychology, Ross relies on a tradition (e.g., Vernon Smith, but also Werner Hildenbrand) that uses the specific structure of markets in the narrow sense to account for the regular behavior of variables such as prices and quantities. He seems to endorse this point when he states, for instance, that standard economic analysis “becomes a useful modeling framework only when behavior is conditioned by market institutions.” (253) In contrast, he relies on the broad definition when he tries to defend the last claim of the book: “economics and sociology study the same subject matter” (282). It might well be granted that the subject matter of sociology is some types of “markets” in the sense of some structures that can be modeled with game theory. But that also holds for evolutionary biology, although it seems disingenuous to say that economics and biology therefore “study the same subject matter”. More importantly, if the goal of the book is to specify the appropriate relationships of economics—the “scientific study of markets”—with its two neighbors—psychology and sociology—it is crucial that the same definition of markets is used in both cases.
16This book is a challenging and rewarding read. I was initially worried by the reification of disciplines implicit in Ross’s main question. To me, economics, like all other disciplines, is a diverse bundle of research with vague boundaries. Asking what it is “fundamentally about” is thus close to foolish. But the book has much to offer even to those who are not thrilled by its main question. Beyond the talk about disciplines, it offers a sophisticated defense of a general approach to the study of social phenomena.