ABSTRACT
The traditional point of view in science has been that its main purpose is explanation. Prediction may be a good second best when explanation is not available, but it is never a first best.
Models (be they verbal or mathematical) are a simplified version of reality. The key issue is what features of the real world are kept in the theoretical model and what features are disposed of. When policy conclusions are drawn from a theoretical model it should be remembered that only some and not all causal factors have been taken into consideration.
Economic theory should pay much more attention to the significance and usefulness of models for policy and applied questions and less to analytical elegance.
Applied economists should be careful when choosing among theoretical models, paying attention to their assumptions and checking whether they resemble the real-world conditions they have to work with.
The need for a demarcation criterion to differentiate between science and non-science is discussed. Every discipline at any point in time has certain patterns to delimit what is science and what is not. Provided there is a level playing field where rival research programs compete with each other, progressive research programs will displace degenerating ones, according to Lakatos.
However, this does not necessarily avoid the persistence of false paradigms in the discipline.
It is remarked that social sciences cannot be totally decontaminated from ideological components.
According to Kuhn, competing paradigms are incommensurable; this is for sure true for social sciences. A priori beliefs play a decisive role in choosing what side of the divide the economist will be on and what tool kit she will resort to.
