Economic philosophy is a way of thinking, and economics has its own laws and principles around markets. Economic philosophical thinking maintains dynamic equilibrium (ideal state), where verifiability and falsifiability, qualitative ideas and quantitative methods, ideal and reality, theoretical principles, and empirical facts are combined together. Economics resembles a field that combines science and art. Economic philosophy is a way of thinking that combines verifiability with falsifiability and qualitative ideas with quantitative methods.
TopCombining Verifiability With Falsifiability
Since Popper introduced his idea of falsifiability, scientists paid more attention to the standard of falsificationism. Actually, both verificationism and falsificationism co-exist in science. The proof methods in mathematics include the verifiability system, while the double-blind experimental methods in biomedical sciences belong to the falsifiability system. In general, we may conclude that verifiability comes from deduction tradition and falsifiability is induction tradition (except complete induction).
The difference between verifiability and falsifiability in science deserves a bit of elaboration. It is not always obvious what principles are used to evaluate scientific theories, and we can discuss the difference by thinking about Popper’s asymmetry. Consider a scientific theory (T) that predicts an observation (O). We could attempt to verify or falsify the observation. There are two ways we could add the weight of experiment to a particular theory to approach whether or not it is deductively valid, as shown in Table 1.
Table 1. Verifiability or falsifiability
| T or O | Verification | Falsification |
| Condition | If T, then O | If T, then O |
| O | O | Not-O |
| T | T | Not-T |
| Conclusion | Deductively invalid | Deductively valid |
Science could only tell us that the theory was false (or the theory had yet to be refuted). Popper concluded that it is impossible to know whether a theory is true based on observations (O). He concluded that meaningful scientific statements are falsifiable.
However, scientific theories might not be so simple. Scientists could base the theories on a set of auxiliary assumptions (AA). When we take into account the role of the auxiliary assumptions (AA) of a theory (T), the symmetry between verification and falsification are recovered by the Quine-Duhem thesis (Gillies, 1998). These auxiliary assumptions can help show that science is often not a deductively valid exercise. If the predicted observation (O) turns out to be false, we can deduce only that something is wrong with the conjunction, (T and AA), we cannot determine from the premises that it is T rather than AA that is false. In order to recover the asymmetry, we would need the assumptions (AA) to be independently verifiable, as shown in Table 2.
Table 2. Verifiability or falsifiability with AA
| T or O | Verification | Falsification |
| Condition | If (T and AA), then O | If (T and AA), then O |
| O | AA and O | AA and Not-O |
| T | T | Not-T |
| Conclusion | Deductively invalid | Deductively valid |