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Reading: The Covariance between Explanation and Prediction in Economic Models

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The Covariance between Explanation and Prediction in Economic Models

Author:

Hanna Schübel

University of Hamburg; University of Bayreuth, DE
About Hanna

Many thanks go to Donal Khosrowi for his supervision of this work and to Susanne Burri for her comments on an earlier version.

MSc program Politics, Economics and Philosophy (2016). She holds a BA in Philosophy & Economics. Her main areas of interest are political & legal theory and philosophy of science.

 

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Abstract

This essay considers the relation between two aims of economics: prediction and explanation. It presents an argument for the covariance thesis, the intuitive claim that predictive and explanatory performances of economic model covary under certain circumstances. The covariance thesis captures the intuition that prediction and explanation are inherently connected: If the relevant independent variables in the model allow for prediction and explanation and the inclusion of more independent relevant variables increases both performances of the model, the performances will covary. A central question of the essay is what constitutes an explanation in economics and different approaches are presented. Finally it is argued that the intuition behind the covariance thesis is in line with Hempel's symmetry thesis.

How to Cite: Schübel, H., 2016. The Covariance between Explanation and Prediction in Economic Models. Rerum Causae, 8(2), pp.37–49.
Published on 01 Jul 2016.
Peer Reviewed

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