EQX7001/ AA0X7001

Lecture 2

Paradigms （范式） and Philosophical

Foundations:
Logic & Fallacies
Contents

• Paradigms
• Knowledge: Classification and Reliability
• Deductive and Inductive Research
 Introduction

• There is a need to recognize that we are operating within a paradigm. Paradigms refer to the frame
of reference through which to observe and understand.

• The goal of the research process is reliable knowledge, or that which is acceptable based on
evidence.
 Paradigms

• Macrotheory – a theory aimed at understanding the “big picture” of institutions, whole

societies, and the interactions among societies.
• Examples: class struggles, international relations, and interrelations between social
institutions

• Microtheory – a theory aimed at understanding social life at the intimate level of

individuals and their interactions.
• Examples: dating behavior, jury deliberations, student-faculty interactions

• Mesotheory – referencing an intermediate level between macro and micro.

• Examples: studying organizations, communities, and social categories
 Classification of Knowledge

• Normativistic knowledge is knowledge about values. It is subdivided into two:

- Prescriptive knowledge – knowledge of what ought/ ought not to be done to solve a specific
problem. It can be conditional or unconditional.
- Knowledge of values – knowledge of the good and bad of conditions, situations, and etc.

• Positivistic knowledge is knowledge of situations, conditions or events that are directly observable
or measurable.
• Public knowledge is knowledge that can be demonstrated to others through logic or evidence. It is
reliable knowledge.

• Private knowledge is that which we accept or know for ourselves, but that cannot be demonstrated
to others. Its reliability cannot be accepted on the basis of evidence. It is used with caution in the
realm of research.

• Knowledge is gained through:

- Senses; Experience; Intuition; Revelation; Measurement Reasoning.

• Knowledge obtained through reasoning is the only way to derive reliable knowledge of relationships
and patterns through which we develop explanatory or predictive capability
 Reliability of Knowledge

• Two general criteria for reliability:

- It can be supported by evidence;
- The way the evidence is obtained or generated can be demonstrated or reproduced.

• The evidence can be quantitative or it may be logical constructions that include data but proceed
on to relationships, generalizations or deductions/ inductions from the data.

• Some evidence are measurable (factual information) but for those that cannot be directly
observable, we use reasoning or logic.
Deductive and Inductive Research

• Logic may be classified as deductive and inductive.

• Deduction – The logical mode in which specific expectations of hypotheses are developed on
the basis of general principles. The process of reasoning from general principles/ assumptions
to specific results or conclusions.

• Induction – The logical mode in which general principles are developed from specific
observations. The process of reasoning from specific circumstances or outcomes to a
conclusion about general circumstances or outcomes. Induction is used extensively in
economics.

• Deductive Model – research is used to test theories.

• Inductive Model – theories are developed from analysis of data.
Dialectics of Social Research
• Deductive construction:
1. Specify the topic.
2. Specify the range of phenomena your theory addresses.
3. Identify and specify your major concepts and variables.
4. Find out what is known about the relationships among those variables.
5. Reason logically from those propositions to the specific topic you are examining.

• Inductive construction:
- Grounded Theory
- Field Research

• Logical explanations are also what theories seek to provide.

1. Theories prevent our being taken in by flukes.
2. Theories makes sense of observed patterns.
3. Theories shape and direct research efforts.
 Philosophical Foundations

• Economic thinking and research methodology are influenced by different philosophical positions of
individuals.

• Each philosophical position holds views about and offers prescriptions for what is “proper” in terms
of activities, attitudes, and approaches used in economic research.

• There are many philosophical value positions (offering different views of what constitutes reliable
knowledge). However, we focus on three:
- Positivism
- Normativism
- Pragmatism

• How have these philosophies contributed to methodological approaches?

Note: The boundaries of research activity are not set by any single philosophical position.
Positivism

• Adheres to the view that:

- Only ‘factual’ knowledge gained through observation (senses), including measurement, is
trustworthy – standard empiricism.
- Emphasis on experience is encompassing; no recognition of the significance of a practical (real-
world) problem as a reason to observe and assemble facts and postulate hypotheses.
- Based on empirically untested presuppositions; but accept the untested presupposition that
experience is empirically knowable.
- Culturally dependent; experience through which observations are interpreted is affected by the
cultural environment.

• ‘Pure positivism’ even discounts theory and reasoning as valid, for arriving at reliable knowledge.
• The more modern view of positivism embraces the logical extension of the facts – logical positivism
(emphasizes determination of value-free information and knowledge of values about phenomena;
focus on determining ‘what is’). It accepts the validity of knowledge about values people hold
regarding things or circumstances but will not accept the validity of descriptive knowledge about
values as real characteristics.

• Logical positivism influenced economics in the 20th century (facilitated by empirical data availability
and inductive techniques and technology), but is not the dominant philosophy in economics. It is
too limiting.

• Economists cannot fully embrace the philosophy of positivism because many things that are not
concrete are nonetheless ‘real’. However, it has a profound effect on economic thinking in the
following manner:
- Places more emphasis on measurement and quantification, where possible;
- Focuses attention on knowledge about values;
- Highlights the importance of objectivity (providing evidence) in the practice of economics and
economic research.
• Some drawbacks:
- It fails to recognize any considerations of usefulness or applicability.
- It affects disciplinary and subject-matter research. Its role in disciplinary research is seen in its
effects on empirical testing in the development, refinement and validation of theory, and in the
research on new procedures for studying relationships. In subject matter research, its effects are
more obvious in the estimation of parameters and relationships that provide the basis for policy
decisions.
 Normativism

• Takes the position that knowledge of the good and bad of conditions, situations, things and actions
is valid and even necessary in order to produce prescriptive knowledge.
• Conditions and situations can be good or bad but they cannot be right or wrong. Actions can be
both good or bad and right or wrong.
• More prominent in the broad range of problem-solving and subject matter than in the more
restrictive activity of disciplinary economic research within economics.
• Emphasizes matters on which people place value.
• Accept the presupposition that intrinsic values are knowable, if only from a given perspective.

• Objective normativism refers to a position that the desirability (goodness) of a result or outcome (or
lack of it) from the point of view of individuals or groups can be known, whatever the beliefs are and
whatever reason they may exist.
• It is not very different from the position of logical positivism.
• Accept the objective value knowledge is sometimes essential for statements or prescriptions about
what should be done to accomplish specified goals or objectives.
• It is an inherent part of economics or economic research and there is no reason to consider it
inferior – as long as it is kept objective and contrasted with subjective.
• Any discipline that deals with public policy must use normative value judgements.
• It contributes to all 3 types of knowledge:
- It has a direct and obvious connection with knowledge of values and prescriptive knowledge.
- It has an indirect connection with positivistic knowledge; through knowledge of values.

• It influences disciplinary research through its focus on knowledge about values and behaviour.
• It is exhibited in subject-matter research through both knowledge of values and prescriptive
knowledge.
• Problem solving research depends more heavily on the prescriptive knowledge emphasis of
objective normativism.
Pragmatism

• Holds that what is important with respect to descriptive knowledge is how well it works for solving a
problem at hand; primary concern is on prescriptive knowledge.
• Attention to theoretical logic for its own sake and distinctions between abstractions such positivistic
knowledge and knowledge about value are relatively unimportant.
• They are interested in applying concepts to solve problems. The emphasis is on relevance, as it
attempts to produce knowledge that is useful in addressing contemporary problems.
• They regard value-free knowledge and knowledge of value as interdependent and inseparable.
• Workability (appropriateness for the problem at hand) is a central pragmatic criterion for judging
empirical propositions, i.e. primary test for reliability of prescriptive knowledge.
• Plays a large role in problem-solving research than in subject-matter research, and has the least
influence in disciplinary research.
How the philosophies blend?

• The three philosophies – logical positivism, objective normativism and pragmatism – may be
relatively more or less important according to the type of research.

• In disciplinary research, in which we can include basic theoretical research, basic descriptive
research and research on specific analytical procedures that may be applied within the discipline,
both logical positivism and objective normativism provide the philosophical focus.
- Objective normativism that emphasizes knowledge of values as they relate to behaviour, is
particularly important in theoretical constructions that describe and explain economic behaviour of
individuals and groups.
- Logical positivism is an important component of the development or adaptation of basic analytical
procedures.
• Pragmatic prescriptions are usually less prominent in strict disciplinary research than in subject-
matter or problem-solving research.

• In subject-matter research:
- It can be restricted to being only positivistic in terms of its empirical estimation processes and
procedures.
- Objective normativism entails leaning more towards development of prescriptive knowledge
based on both value and value-free knowledge.
- It also has a pragmatic focus because the perceptions must achieve the desired effects.
• In problem-solving research:
- There can be positivism (eg: estimating parameters) in the empirical estimation procedures.
- There can be normativism in the estimation procedures.
- Always has a pragmatic content because of its emphasis on a particular kind of prescriptive
knowledge.
• Note: The three types of research are usually not easily separated, as a given research
may embody multiple types. Every type of research is relevant.
Empiricism in Research Methodology

• Logical positivism fostered interest in measurement or quantification – use of data to test validity of
theories and derive expected magnitudes of effects as basis for policy recommendations.

• Logical empiricism may be viewed as going beyond logical positivism to subjecting the results of
logical positivism to testing.

• Econometrics, which has its origins in the early 1900s and achieved legitimacy in the 1940s and
1950s, includes empirical data and measurements. This makes it more positivistic and more
pragmatic and thus more than merely an abstract logic of mathematical economics.
• The scientific approach, which involves the following 5 steps, adapts elements of the three
philosophies:
(1) Identify the problem/ issue/ question;
(2) Define the research objectives;
(3) Develop approaches for achieving objectives;
(4) Conduct the analysis
(5) Interpret the results and draw conclusions.

• Steps (1) and (2): Identifying a problem and deciding on research objectives contains elements of
normativism (involves perceptions), and may well contain elements of pragmatism (especially for
problem-solving or subject-matter research).

• Steps (3) and (4): Developing and conducting the analysis may be, but are not necessarily,
positivistic (validation of concepts or hypotheses).
Tests for Overall Reliability

• These tests include:

- Logical coherence;
- Correspondence;
- Clarity (comprehensiveness);
- Workability.

• Logical coherence – examining an outcome or proposition to see if it is free of logical contradiction.

• Correspondence – comparing an outcome or statement to what is already known to see if it is

consistent with or corresponds to prior knowledge.

• Clarity – examines the outcome or proposition for lack of ambiguity or vagueness. If the result or
proposition has more than one meaning, it fails the test of clarity. There is also a lack of clarity
when the development or application of a concept is followed by terms that are not defined.

• Workability – requires that the result solve the problem or issue addressed.
 Other Elements

• Observation – seeing, hearing, touching.

• Fact – a phenomenon that has been observed.

• Laws – universal generalization about classes of facts.

• Theory – a systematic explanation for observations that relate to a particular aspect;

consists of logical relationships among facts.

• Concepts – abstract elements representing classes of phenomena within the field of study.

• Variable – a set of attributes.

• Axioms or Postulates – fundamental assertions on which a theory is grounded.

• Propositions – specific conclusions, derived from the axiomatic groundwork, about the
relationships among concepts.

• Hypothesis – a specified, testable expectation about the empirical reality that follows from
a more general proposition. It is a tentative assertion of a relationship between factors or
events that is subject to verification or rejection.

(i) In economics, we envision statistical hypotheses that must have three characteristics to be fully
justified:
 they must have a conceptual basis, that is built on theoretical reasoning;
 they must be sufficiently specific, to be rejected or not, based on data;
 there must be data and techniques available to test them.
(ii) Qualitative/ conceptual hypotheses do not lend themselves to formal, quantitative evaluation.
They are used as reasonable contentions, assertions or premises. They can be agreed upon, or not,
by informed, objective evaluators. They can be classified as:
 Maintained hypotheses – Assumed to be true for the purposes of a study. Acceptance of a
maintained hypothesis in the form of general agreement is necessary for the study to proceed and
the results to be excepted.
 Diagnostic hypotheses – Propositions about the causes of a problem. Acceptance of a diagnostic
hypothesis as a consensus of analytical reasoning is necessary to establish the premises of the
study or the acceptability of results and interpretations.
 Remedial hypotheses – Propose solutions to problems. They offer prescriptions for potential
solutions to problems. They are accepted or rejected by weight of evidence by reasons.
• Theory plays a central role in applied research by providing the conceptual base for specific
applications. Five functions of economic theory in empirical research:
- Formulating the research problem;
- Formulating hypotheses;
- Designing the empirical procedures;
- Assembling appropriate data’
- Interpreting findings.

• The functions of theory in economic research are:

• Orientation – It provides a framework to examine or delineate a problem or question;
• Classification – It provides a precise means of communication. The set of definitions and
specifications embodied in the development of theory provides terms and relationships that have
specific, defined meanings that facilitate understanding of complex concepts and phenomena.
• Conceptualization – It gives the means to visualize how something works or to suggest cause and
effect relationships that cannot be observed directly. Theory gives us the means to reason through
alternate modes of behaviour by abstracting to ideal types, giving them rules for behaviour and
hypothetically playing them out.
• Summarization – two types (a) empirical generalizations; (b) generalized relationships.
- Provision of precision – in thought processes. It helps to relate facts and concepts. Theory can sort
out cause and effect.
- Prediction of facts or identification of hypotheses.
- Identification of gaps in our knowledge – When the body of theory is inadequate to help explain
phenomena, there is an inadequacy in our theoretical understanding.

• Step 5: Interpretations may introduce normativistic elements into the process.

• Differences in specific applications of the scientific approach revolve around different emphasis on:
• The type of problem (disciplinary, subject-matter of problem-solving);
• The nature and types of hypotheses (explicit vs. implicit and quantitative vs. qualitative).
• The roles and functions of implications, conclusions and / or prescriptions.