Sunday, September 4, 2016

Peter Dorman — Internal/External, Validity/Consistency

As every consultant knows, all the mysteries of the universe can be revealed in a two by two matrix. We divide the cases up one way and then some other way. That gives us four cells and vast, remunerable wisdom.
Here is my version for economics. One way of dichotomizing how much faith we should put into hypotheses is between reasoning and evidence. Reasoning is about consistency. An inconsistent argument is at war with itself in some way and should be regarded with suspicion. The other criterion is evidence. Evidence either adds to or detracts from the validity of an argument. Ideally a hypothesis should be strong on both fronts, although we know our powers of formulating and testing hypotheses are incomplete, especially in social sciences like economics. We don’t necessarily rip up and burn theories that have consistency or validity problems, but we take those problems seriously. Or should.
The other dimension is internal/external. Internal means “with respect to this particular empirical study or body of theory” and external “with respect to all the rest of the empirical cases and theory out there”. Each piece of work needs to be judged on its own terms, but research and analysis do not occur in a vacuum. We also have to be mindful of the empirical world outside our particular sample, and we should respect the models developed by other researchers, especially when they have done well on consistency and validity tests.…
Econospeak
Internal/External, Validity/Consistency
Peter Dorman | Professor of Political Economy, The Evergreen State College

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