Reflexivity and Economics

George Soros's theory of reflexivity and the methodology of economic science

John Davis, D. Hands, John Davis, D. Hands, John B. Davis, D. Wade Hands

• Publisher: Routledge
• Year: 2018
• eBook ISBN: 9781315471594
• Edition: 1
• Topic: Business
• Subtopic: Business General
• Index: Business

The form of 'reflexivity' – defined by the dictionary as that which is 'directed back upon itself' – that is most relevant to economic methodology is that where observation of the economy leads to ideas that change behavior, which in turn changes (is directed back upon) the economy itself. As George Soros explains: "if investors believe that markets are efficient then that belief will change the way they invest, and that in turn will change the nature of the markets they are observing … That is the principle of reflexivity".

Although various versions of reflexivity have long been discussed, in recent years George Soros has been particularly effective in bringing ideas about reflexivity to the attention of the economic and financial communities. In a series of writings he has systematically argued that reflexivity is not only an important aspect of economic life, it is an aspect that is neglected in most mainstream theorizing; and in addition, that the neglect of reflexivity has been responsible for the failure of economists to predict, explain, or offer a solution for events such as the recent financial crisis.

Soros' ideas about reflexivity have important methodological significance, and his chapter in this book summarizes and clarifies his arguments. His contribution is joined by those of thirteen scholars from a wide range of relevant fields, who provide a commentary on the idea of reflexivity in economics. This book was originally published as a special issue of The Journal of Economic Methodology.

Table of contents

• Cover
• Half Title
• Title
• Copyright
• Contents
• Citation Information
• Notes on Contributors
• Introduction: ‘Reflexivity and economics: George Soros’s theory of reflexivity and the methodology of economic science’
• 1. Fallibility, reflexivity, and the human uncertainty principle
• 2. Reflexivity, complexity, and the nature of social science
• 3. Reflexivity unpacked: performativity, uncertainty and analytical monocultures
• 4. George Soros: Hayekian?
• 5. Reflections on Soros: Mach, Quine, Arthur and far-from-equilibrium dynamics
• 6. Soros’s reflexivity concept in a complex world: Cauchy distributions, rational expectations, and rational addiction
• 7. Hypotheses non fingo: Problems with the scientific method in economics
• 8. Fallibility in formal macroeconomics and finance theory
• 9. Reflexivity and equilibria
• 10. Reflexivity, expectations feedback and almost self-fulfilling equilibria: economic theory, empirical evidence and laboratory experiments
• 11. Soros and Popper: on fallibility, reflexivity, and the unity of method
• 12. Reflexivity, uncertainty and the unity of science
• 13. On the role of reflexivity in economic analysis
• 14. Broader scopes of the reflexivity principle in the economy
• Index