On Socio-Economic Analysis

"Hence, even in the domain of natural science the aid of the experimental method becomes indispensable whenever the problem set is the analysis of transient and impermanent phenomena, and not merely the observation of persistent and relatively constant objects." (Wilhelm Wundt, "Principles of Physiological Psychology", 1874)

"It is only by historical analysis that we can discover what makes up man, since it is only in the course of history that he is formed." (Émile Durkheim, "The Dualism of Human Nature and its Social Conditions", 1914)

"The study of the conditions for change begins appropriately with an analysis of the conditions for no change, that is, for the state of equilibrium." (Kurt Lewin, "Quasi-Stationary Social Equilibria and the Problem of Permanent Change", 1947)

"Every economic and social situation or problem is now described in statistical terms, and we feel that it is such statistics which give us the real basis of fact for understanding and analysing problems and difficulties, and for suggesting remedies. In the main we use such statistics or figures without any elaborate theoretical analysis; little beyond totals, simple averages and perhaps index numbers. Figures have become the language in which we describe our economy or particular parts of it, and the language in which we argue about policy." (Ely Devons, "Essays in Economics", 1961

"The most important and frequently stressed prescription for avoiding pitfalls in the use of economic statistics, is that one should find out before using any set of published statistics, how they have been collected, analysed and tabulated. This is especially important, as you know, when the statistics arise not from a special statistical enquiry, but are a by-product of law or administration. Only in this way can one be sure of discovering what exactly it is that the figures measure, avoid comparing the non-comparable, take account of changes in definition and coverage, and as a consequence not be misled into mistaken interpretations and analysis of the events which the statistics portray." (Ely Devons, "Essays in Economics", 1961)

"The treatment of the economy as a single system, to be controlled toward a consistent goal, allowed the efficient systematization of enormous information material, its deep analysis for valid decision-making. It is interesting that many inferences remain valid even in cases when this consistent goal could not be formulated, either for the reason that it was not quite clear or for the reason that it was made up of multiple goals, each of which to be taken into account." (Leonid V Kantorovich, "Mathematics in Economics: Achievements, Difficulties, Perspectives", [Nobel lecture] 1975)

"The assumption of rationality has a favored position in economics. It is accorded all the methodological privileges of a self-evident truth, a reasonable idealization, a tautology, and a null hypothesis. Each of these interpretations either puts the hypothesis of rational action beyond question or places the burden of proof squarely on any alternative analysis of belief and choice. The advantage of the rational model is compounded because no other theory of judgment and decision can ever match it in scope, power, and simplicity." (Amos Tversky & Daniel Kahneman, "Rational Choice and the Framing of Decisions", The Journal of Business Vol. 59 (4), 1986)

"In principle, every social situation involves strategic interaction among the participants. Thus, one might argue that proper understanding of any social situation would require game-theoretic analysis. But in actual fact, classical economic theory did manage to sidestep the game-theoretic aspects of economic behavior by postulating perfect competition, i. e., by assuming that every buyer and every seller is very small as compared with the size of the relevant markets, so that nobody can significantly affect the existing market prices by his actions." (John Harsanyi, "Games with Incomplete Information" 1997)

"Uncertainty, generally conceived, is not often embraced in public discussions of economic policy. When uncertainty includes incomplete knowledge of dynamic responses, we might well be led away from arguments that"complicated problems require complicated solutions." When complexity, even formulated probabilistically, is not fully understood by policy makers, perhaps it is the simpler policies that are more prudent. This could well apply to the design of monetary policy, environmental policy and financial market oversight. Enriching our toolkit to address formally such challenges will improve the guidance that economists give when applying models to policy analysis." (Lars P Hansen, "Uncertainty Outside and Inside Economic Models", [Nobel lecture] 2013)

"When there is a reference to a decision problem, an analysis with multiple priors can deduce bounds on the expected utility consequences of alternative decisions, and more generally a mapping from alternative priors into alternative expected outcomes." (Lars P Hansen, "Uncertainty Outside and Inside Economic Models", [Nobel lecture] 2013)