This chapter introduces agent-based modeling (ABM) as a research tool that possesses advantages for heterodox research programs. We introduce the approach in four steps. First, we discuss the uniqueness of ABMs, which lies primarily in the flexibility to incorporate vastly heterogeneous agents and to address models with high degrees of freedom. Second, we argue that the flexibility of ABMs makes them an appropriate tool for the questions raised by classical and (post-)Keynesian economists. To demonstrate this point we briefly sketch two ABMs, one which constructs an environment that captures the classical-Marxian processes of gravitation, thereby opening new pathways in value theory, and the other is a nuanced analysis of Keynesian effective demand problems and the existence of chaotic cycles in a capitalist economy. The chapter then revisits the flexibility of ABMs in order to discuss their capability of incorporating dimensions from across the broad variety of heterodox research programs.
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Jonathan F. Cogliano and Xiao Jiang
Field research for economists usually involves the administration of a survey instrument designed to yield quantitative data that can be used to test the predictions of an a priori theoretical model. In this chapter, I argue that qualitative methods can be valuable to the heterodox economist in generating hypotheses about economic phenomena, developing survey instruments and interpreting quantitative data. More importantly, the use of open-ended questions, unstructured interviews, and focus groups permit researchers to understand how and why certain decisions are made, from the perspective of the decision-makers themselves, while shedding light on the social and institutional context within which these decisions are made. I discuss my own experiences with using a mix of qualitative and quantitative methods to understand the role of gendered social norms of household provisioning in shaping the impact of remittances from migrant women on education expenditures of rural households in the Northern Region of Ghana.
This chapter provides an introductory account of the core elements of a generic critical realist social ontology for economics. The focus on social ontology in critical realism puts forward a position based on causal powers inhering in entities (such as structures and agents), complex interactions between causal powers in terms of arising events, and a consequent account of systems as ‘open’. According to its proponents, this social ontology is implicit within heterodox economic positions but is antithetical to mainstream economics. This is because mainstream economics pursues theorizations and applications that reduce to closed systems and typically assume and/or explore event regularities, often based on uses of mathematical models that are expressed in a deductive form. Critical realism’s great strength is that it provides a more plausibly realistic account of the economy as an intrinsic aspect of society; in so doing it ‘under-labours’ for heterodox approaches. However, in so far as it only under-labours, critical realism can also be developed in a variety of ways based on different issues for methods and methodology.
Nuno Ornelas Martins
In this chapter I address the critical realist critique of mainstream econometrics, and its implications for heterodox economics. Mainstream econometrics uses a methodology that presupposes constant conjunctions of the form ‘if event X then event Y’ and, unlike the classical economics and heterodox economics, isolates those constant conjunctions from the overall process of reproduction of socio-economic activity. The classical political economists, in contrast, were concerned with the reproduction and distribution of the surplus as a whole, and tried to describe this activity by focusing on objective and observable quantities. In so doing, the classical economists used a very different approach to measurement, following a realist method and theory, which has also been developed more recently by heterodox economists, and is consistent with the critical realist methodology too. I conclude that heterodox economists, rather than mainstream economists, are the true heirs of the social surplus approach initiated by the classical economists, who developed a perspective focused on the reproduction of socio-economic activity (as the classical authors also did), which is the central aspect to be addressed within economic and social theory according to the critical realist framework.
Frederic S. Lee
This chapter articulates a relationship between critical realism and the method of grounded theory, arguing that this is particularly well suited for heterodox economic enquiry. Such an approach to theory creation and evaluation directly engages with mixed research methods (such as historical method, survey methods, participation observation method, analytical statistics, social network analysis, modeling, and cases), data triangulation, and historical theorization. Because critical realism is concerned with the social ontology of the domain of economics and the method of rounded theory promotes the use of mixed research methods and data triangulation, heterodox economics does not have a preference for a particular method or data.
This chapter illustrates the use of data triangulation to understand how Bulgarian small landholders use their land. Previous work has not satisfactorily explained observed behavior of these smallholders. Without information on intentionality, it is not possible to distinguish among causal mechanisms that might be driving the observed outcomes. I add in-depth interviews to household survey data, in order to provide information about the intentionality of the decision-makers. I argue that interview data show that in the complex, and limited, informational context, many decision-makers satisfice, and that the initial plans which satisficers evaluate are heavily influenced by local history.
Susan K. Schroeder
Business cycles are a notoriously elusive phenomenon for theorists, practitioners, and policy-makers. They are just one of a multitude of cyclical behaviors that a capitalist market economy exhibits. Detecting them requires a clear vision not only of the dynamics that generate them, but also of how to approach isolating the cyclical component in time series data. This chapter provides an overview of the theoretical approaches to thinking about what causes business cycles, the ways in which time series analysis has been used to detect cyclical patterns in data, and a discussion of the methodological challenges that heterodox economists face when selecting time series techniques and the advantages they have for more clearly understanding the dynamics which lie behind data.
This chapter explores how heterodox economists might deploy experimental methods. It considers the basic form of the pure experiment and notes some key challenges to it. It then goes on to discuss alternative experimental designs, which are responses to the challenges of the pure experiment. The chapter then considers statistical analysis of experimental data.
Michael J. Murray
The chapter seeks to inform readers of factor analysis as an analytical procedure for conducting heterodox economic research, particularly research conducted within a grounded theory_critical realist framework. The chapter enlightens the readers to analytical methods of model building suitable for social and behavioral research. Factor analysis is used many social science disciplines, including business, psychology, sociology, and anthropology, and is just beginning to penetrate the economic discipline. Factor analysis provides a toolkit for those who seek a broader understanding of social and economic phenomena in terms of its underlying social structure. The chapter contextualizes factor analysis within the heterodox economic approach of critical realist_grounded theory and discusses the various methods within factor analysis and conditions for their use.
Natalia Bracarense and A. Reeves Johnson
According to Frederic Lee, heterodox economics studies the social provisioning process. As a process implies movement through time, an understanding of history and historical change would seem necessary to study social provisioning. Living up to this claim, however, has proven to be difficult in practice. As a step towards overcoming these challenges, the present chapter argues that the agency–structure framework espoused by critical realists permits the use of genuinely historical methods and data. With the support of this argument, this chapter is devoted to an evaluation of research methods for an economics informed by history, and one that understands social change as the interaction between agents and social structures.