Source: David Friedman’s Substack
by David Friedman
“I conclude that the correct way of doing economics combines a priori theory with evidence. You form plausible conjectures on the basis of theory and evidence, where part of forming them is deciding what simplifications, what unrealistic features of the model, assume away inessential complications while retaining the essential features of what you are trying to understand. You find out how good a job you have done by using the conjectures to make predictions and testing them. An added benefit of that process, as I discovered in the course of revising what became my first published journal article in economics in response to an initial rejection, is that finding real world predictions of your model may force you to think through the model itself more carefully. That is the Chicago School methodology as I understand and practice it.” (08/01/25)