Theory, Consistency and Rhetoric

Abstract

This paper considers the role of theory in our understanding of economic phenomena. While theoretical findings are sometimes claimed to have direct, real world relevance, this is based on rhetoric rather than logic. Theory can and has been considered as analogy, metaphor or framing. These aspects are discussed, along with two examples. The examples are Sen on commitment in his paper on rational fools, and the Tversky and Kahneman life/death rational choice case. For both of these, the issue of consistency is considered, with alternative formulations and interpretation suggested. It is suggested that we may be misrepresenting the relevance of theoretical findings. Insufficient attention may be given to the simplifying assumptions, or to the possibility of alternative explanations that are also consistent with the evidence. The paper then discusses the question of acceptance and rejection of theory. Alternative positions are described, asking under what circumstances a theory might be effectively challenged or its limitations acknowledged.

Keywords: theory, rhetoric, rationality, analogy, metaphor

JEL Classification: A10, B40