Academic journal article Review of Social Economy

The As-If View of Economic Motivational Hypotheses

Academic journal article Review of Social Economy

The As-If View of Economic Motivational Hypotheses

Article excerpt

I. Introduction

An economic motivational hypothesis ascribes a goal to economic agents of some specified type. Neoclassical microeconomic models regularly include motivational hypothesis. The model of the rational consumer assumes that consumers seek to maximize their utility; the model of the purchasing behavior of a firm in a competitive factor market includes the hypotheses that a firm desires to hire a quantity of a factor which maximizes firm profits; and so on. My aim here is to develop an interpretation of motivational hypotheses in neoclassical micro theory which I will call the "as-if view." The as-if view has been presented before (Friedman, 1953). But I will develop the view somewhat differently than has been done hitherto. In addition, an effort will be made to rebut some criticisms of the as-if view which appear to remain unanswered.

II. What the As-if View Says

The as-if view invites us to construe economic motivational hypotheses non-literally, though they do purport to be true. Let me be more precise. On the as-if view, intentional terms such as "seek to maximize utility" and "desire to maximize profits" occurring in economic motivational hypotheses are non-referential. A term E is non-referential in a class of sentences K if each sentence in K can be construed so that its truth is consistent with there not existing anything denoted by E.(1) For example, the term "the average reader of Forbes" is non-referential in all sentences containing the term we wish to affirm. A true sentence like

(1) The average reader of Forbes has a net worth of $1,374,138. is equivalent to

(2) The sum of the net worth of all readers of Forbes divided by the number

of readers of the magazine is $1,374,138.

To paraphrase (1) as (2) indicates that the truth of (1) is consistent with there not really existing anything denoted by "the average reader of Forbes." The existence of live, flesh and blood readers of Forbes is really all that is needed to make (1) true.

Again, the as-if view says that intentional terms such as "seek to maximize profits" occurring in economic motivational hypotheses are non-referential. But how are economic motivational hypotheses like "firms seek to maximize profits" to be paraphrased so that intentional terms such as "seek to maximize profits" are non-referential? The equivalence of (1) and (2) above affords what Bertrand Russell would have called a "definition in use" of "the average reader of Forbes." It is not possible to offer a definition in use of intentional terms in economic motivational hypotheses. But an alternative is available. Consider the following sentence affirmed of a hummingbird.

(3) The hummingbird believes that the feeder still has sugar solution in it.

One way to construe (3) so that its truth is consistent with the intentional term "believes that the feeder still has sugar solution in it" not denoting anything, is to view (3) as equivalent to

(4) It is as if the hummingbird believes that the feeder still has sugar solution

in it.

The hummingbird's behavior -- say, poking its beak into the feeder -- may justify (4). But (4) is compatible with "believes that the feeder still has sugar solution in it" not denoting hummingbirds or anything else. Let us call "as-if statements" statements of the form "-- as if -- or of the form "It is as if --." Generally speaking, as-if statements can be true even though what follows the term "as if" is false. Suppose Jack, an accused murderer, is putting on a clever act to deceive the psychiatrists who will testify at his upcoming trial. We may say "Jack is behaving as if he is insane." This remark can be true even though Jack is not insane at all. Thus, (4) above can be true even though the intentional term "believes that the feeder still has sugar solution in it" denotes nothing. Now, since (4) is compatible with the intentional term occurring in it being non-denoting, and (3) is being viewed as equivalent to (4), then (3) too is compatible with "believes that the feeder still has sugar solution in it" being non-denoting. …

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