Economic History Association

Economic Theory, Statistical Inference, and Economic History

Author(s): John R. Meyer and Alfred H. Conrad
Source: The Journal of Economic History, Vol. 17, No. 4 (Dec., 1957), pp. 524-544
Published by: Cambridge University Press on behalf of the Economic History Association
Stable URL: http://www.jstor.org/stable/2114882
Accessed: 17-11-2015 14:50 UTC

Your use of the JSTOR archive indicates your acceptance of the Terms & Conditions of Use, available at http://www.jstor.org/page/
info/about/policies/terms.jsp
JSTOR is a not-for-profit service that helps scholars, researchers, and students discover, use, and build upon a wide range of content
in a trusted digital archive. We use information technology and tools to increase productivity and facilitate new forms of scholarship.
For more information about JSTOR, please contact support@jstor.org.

Economic History Association and Cambridge University Press are collaborating with JSTOR to digitize, preserve and extend
access to The Journal of Economic History.

http://www.jstor.org

This content downloaded from 158.170.10.44 on Tue, 17 Nov 2015 14:50:51 UTC
All use subject to JSTOR Terms and Conditions

Inference,
EconomicTheory,Statistical
*
and EconomicHistory
thataccumulated
factslyingin disorder
beginto assume
It is a truthperpetually,
is thrownamongthem.
someorderwhenan hypothesis
HerbertSpencer
therecould only be
If we were not ignoranttherewould be no probability,
But our ignorance
cannotbe absolute,forthentherewouldno longer
certainty.
at all.
be anyprobability
Henri Poincare

THIS

of
to examinecritically
the function
paperis an attempt

in economichistory.
theoryin historicalresearchand particularly
We shall take as our startingpoint the assertionthat the historian
about
is not interestedsimplyin collectingfactsor true statements
some segmentof previousexperience.He wants to find causes and
to explainwhat happened.The purposeof thispaper is to introduce
some of the problemsattachedto the conceptsof historicalcausality
universeand to suggesthow theanalytic
and explanationin a stochastic
toolsof scientific
inference
can be appliedin economichistoriography.
avoidarguments
and will therefore
We wishto avoidmethodenstreit
about precedenceor relativeimportance.The literatureis already
overburdenedwith the logbooksof intellectualvoyagesinspiredby
dichotomy.We rejectthe posthe false chartsof the history-theory
sibilityof such a dichotomyfromthe outset.Instead,we shall assert
simplythateconomicsas a sciencedeals withhistoricalprocessesand
is dependentupon historicalresearch.In any positionotherthan the
the tools of economicanalysis
therefore,
extremeof antiquarianism,
must have some functionin the handlingof the historicalmaterial
that deals with economicprocesses.These tools-theory,statistical
and generallaws of natureand causality-haveseemedto
inference,
or useless,even antitheticalto a
many historiansto be unnecessary
historicalpointof view.The elementsof thisnegativeargumentwill
provideus with an outlinefromwhich to propose the affirmative
position.
*The authorswish to thank the Harvard Foundationfor AdvancedStudy and Research
for a grantfor clericalassistance.The Foundationis not responsiblefor any of the opinions
and conclusionsin the paper.
524

This content downloaded from 158.170.10.44 on Tue, 17 Nov 2015 14:50:51 UTC
All use subject to JSTOR Terms and Conditions

Economic Theory,StatisticalInference 525

First,it is frequently
arguedthatcausalordercannotbe defined
amongsingularhistorical
statements.
This is the "randomness"
approach,whichfaces,at the otherextreme,
the determinist
position
epitomized
by Marx and Schumpeter.
The secondelementis the
assertion
thathistorical
hypotheses
cannotbe statedin probabilistic
terms.The possibility
and necessity
of employing
thatis,obformal,
is thecentral
jective,
probabilities
issuehere.The thirdgroundforthe
rejection
ofstatistical
inference
foreconomic
is theproposition
history
thatthescarcity
andqualityofthedatamakequantification
practically
It is notourintention
impossible.
to arguetheseissuesbutalso
simply
to examinesomeofthepeculiarproblems
of scientific
in
explanation
economic
history.
II
Let us consider
firstwhatwe do whenwe write"history"
or the
of a periodin a particular
history
place.We are concerned
notonly
withstatements
aboutthecharacteristics
of theeconomy(and/orthe
state,thechurch,
thefamily,
etc.) at timesti, t2, t3, . . . , butabout
relationships
of a sequential
typein whichthevariables
havespecific
calendar-time
subscripts.
History
orhistoriography,
then,is thewriting
ofa story.
Justas we expecta storyto havea beginning
and an end,
andthatthebeginning
andtheendshouldbe connected,
we
similarly
expectthesequence
orordering
ofthestatesin a history
tohavecausal
significance.

Thisconcentration
uponorderand sequence-andultimately
upon
causalordering-isnot intendedsimplyas a contrast
or alternative
to the recording
of factsaboutsomeblockof experience.
Histories

are writtenabout I848 or theAmericanRevolutionor the cotton-slave

cultureof the antebellumSouth.The recordingof detail about some
singleclearlyboundedperiodis a valuableoccupation.But it is also
an endlessoccupation,sincethehistorianis facedwithinfinitely
many
truestatements
abouthis period.The concentration
upon causal orderingin thepresentargument
is intendedto illuminatethewaysin which
historians
mustchooseamongthe truestatements.
Withina sequence
or among the conjunctions
of contemporaneous
details,the historian
mustfindthosecharacteristics
whichare mostfertileforexplanation.
When Ranke urged the descriptionof things"as theyactuallyhappened" as a goal forhistorians,
he could not have meantto exclude
fromthedescription
how theygotthatway and whatbecameof them.

This content downloaded from 158.170.10.44 on Tue, 17 Nov 2015 14:50:51 UTC
All use subject to JSTOR Terms and Conditions

JohnR. Meyerand AlfredH. Conrad

526

forouremphasis
uponcausal
Recognizing
thisis sufficient
justification
In addition,
itgivesus a criterion
forthechoiceamongtrue
ordering.
of thesequenceor conjunction
statements:
it is the"causalfertility"
our
search
whichshouldguide
amonghistorical
data.1
inherent
Thereare,however,
seriousand quitespecialdifficulties
eventsand to findcauses
in theattempt
to explainsingular
historical
have led one groupof historians
to
amongthem.Thesedifficulties
and scientific
betweenhistorical
explanation.
drawsharpdistinctions
In theextreme,
groupofhistorians
havebeenled
a secondimportant
in historical
todenythatthedeliberate
searchforcausesis meaningful
by thefollowing
quotastudy.The first
position
maybe represented
tionsfromPopperandRickert,
respectively:
2
(i)

(2)

line of interest,
sharplyto be
Generalization
belongssimplyto a different
fromthatinterest
in specific
eventsand theircausal explanadistinguished
tionwhichis thebusinessofhistory.
to find-theveryconcept
Historicallaws are notjust moreor less difficult
of historical
law carriesan innercontradiction.
Historicaland nomothetic
scienceare mutually
exclusive.

The moreextreme
of
in thefollowing
statements
position
is reflected
Croceand Collingwood,
bothof whichcarrya strong
respectively,
Idealistbias:3
(i)
(2)

The facthistorically
butonly
thought
has no causeand no end outsideitself,
in itself,coincident
withits real qualitiesand with its qualitativereality.
is notthemereevent,butthethought
For history,
theobjectto be discovered
it. After
expressed
in it. To discoverthatthoughtis alreadyto understand
processof inquiring
thehistorian
has ascertained
thefacts,thereis no further
intotheircauses.When he knowswhathappened,he alreadyknowswhy
and therefore
all history,
is the
it happened.. . . The history
of thought,
own mind.
re-enactment
of pastthoughtin thehistorian's

of generalizing
abouthisThe difficulty,
perhapstheimpossibility,
toricaleventsis usuallyattributed
to thespecialcharacteristics
of past
1 See MortonG. White, "Toward an AnalyticalInterpretation
of History,"in Philosophic
Thoughtin France and the UnitedStates,Marvin Farber,ed. (Buffalo,New York, i950),

pp. 705-26.

2Karl Popper,
The OpenSociety
and Its Enemies(Princeton,
I950),
II, 25i and Heinrich
Rickert,Die Grenzender naturwissenschaftlichen
Begrigsbildungquoted in F. C. Lane and
J.C. Riemersma,Enterpriseand SecularChange (Homewood,Illinois,I953), p. 432.
3 BenedettoCroce,The Theoryand Historyof Historiography
(London: GeorgeG. Harrap,
I921),
p. 76 and R. G. Collingwood,The Idea of History(Oxford:The ClarendonPress,I946),
pp. 2I4-I5.

This content downloaded from 158.170.10.44 on Tue, 17 Nov 2015 14:50:51 UTC
All use subject to JSTOR Terms and Conditions

Economic Theory,StatisticalInference 527

events.This is a reference
to theirirretrievable
thatis, the
pastness,
natureof
experiential
andunreproducible,
as opposedto experimental,
historical
knowledge.
thisis to citethe
Anotherway of discussing
uniqueness
or particularity
thelikelihood
offalsiofhistorical
events,
fication
in anyattempt
to reducetheinfinite
richness
of detailthat
defines
eachblockofpastexperience.
The renunciation
forhistory
of
causality
in itsusualscientific
sensestemsalso fromthebeliefthat
humanmotives
and individual
of hisjudgments,
thepropersubjects
toricalresearch
fromtheIdealistpointof view,are notamenableto
quantification
or scientific
generalization.
In addition,
somehistorians
suchas Croceare overwhelmed
of infinite
by theputative
necessity
regress
in historical
explanation,
thatis,bytheviewthatthereis an
infinite
withdrawal
of causesbackintothepast.
Theseassertions
havebeenquotedheuristically,
not in any spirit
of conflict.
The problems
of defining
or assigning
causalrelationship
between
singular
statements
havenotbeensolvedfinally
in anybranch
ofscience;in history
theyappeartobe moredifficult
ofsolution
than
elsewhere.
We shallproceedby defining
causality
and matching
to
thedefinition
thespecialcharacteristics
of historical
sequences.
A causalexplanation
is an answerto the question"Why?"This
seemsa perfectly
sensible,
acceptable
definition
untilwe consider
the
variouswaysin which"why?"questionsare answered.They can
sometimes
be answered-acceptably
froma pragmatic
pointof view
-simplybyasserting
authority:
children
and someadultsuse"why?"
whentheyare reallyaskingforconfirmation.
Moreoften,
however,
onlyan answerthatcontains
"because"will be acceptable.
But even
thisrequires
stiffening
ifwe are to basea strongdefinition
of causal
explanation
uponit. "Because"impliestheconjunction
of properties
or states,
eitherin sequenceor simultaneously,
and a generalization
or assertion
aboutthepermanent
connection
between
theseproperties.
Causal explanation
requires,
in additionto the constant-conjunction
impliedin theanswer"because,"
thattheconnection
or therelationshipshouldbeasymmetrical,
thatis,thestatement
"A causedB" should.
notbe reversible.
A causalexplanation,
then,involves(i) invariant
relationship
and (2) asymmetry.
The asymmetry,
whichmaybe but
is notnecessarily
to be associated
withsequencein time,is thepart
ofthedefinition
thatgivesus causalordering.
Is thereanyinherent
necessity
impliedwhenwe add theasymmetry
totheconstant-conjunction?
Ifthereis,we shallofcoursebe in trouble
withDavid Hume,whohas taughtus notto wasteourtimelooking

This content downloaded from 158.170.10.44 on Tue, 17 Nov 2015 14:50:51 UTC
All use subject to JSTOR Terms and Conditions

528 JohnR. Meyerand AlfredH. Conrad

states.
All thatis required,
forthedemonsorforces
whichrunbetween
to theasserhowever,
is (i) thatwe be abletoassignsomeprobability
willbe followed
bya "second"and
tionthata "first"
setofconditions
The
thattheordercannotbe reversed.
(2) thatitcanbe demonstrated
orderingelementoperational
significance
of thisasymmetry-the
has beenconsidered
by HerbertSimonand Guy Orcuttin theconof
textof econometric
(or theidentification
models.Causalordering
interexogenous
and endogenous
variables)impliesthata particular
or
of coefficients
eitherexperimentally
vention,
thatis, thealteration
of thesyshistorically
in theequations
whichdefinetherelationships
withsubsequent
changesin the
tem,can be specifically
associated
valuesof somevariables
"The causalordering
specifies
in thesystem.
by intervention
at a particular
point
whichvariables
willbe affected
4 Simonoffers
a help(a particular
complete
subset)ofthestructure."
the
fulexamplein therelationships
amongtheamountof rainfall,
sizeofthewheatcrop,andthepriceofwheat.Alteration
in theamount
will probably
affect
thewheat
of rainfall,
by cloud-seeding
perhaps,
variedwithout
cropandthepriceofwheat.The cropmaybe directly
ofcourse,
butthepriceofwheat
subsequently
influencing
theweather,
is likelyto respond.An autonomous
changein theprice,however,
the weatherand can onlyinfluence
the
obviously
cannotinfluence
wheatcropif newvariables
are introduced
intothe
and relationships
The association
interventions
withchangeswithin
system.
ofparticular
amongtheserelationthecomplete
subsets
defines
thecausalordering
conceptand doesnotrequire
ships.Causalordering
is an operational
theintroduction
ofanyunseenforcesor inherent
necessities.
twicein the
Stochastic
or randomelements
havebeenintroduced
of constantthe probability
precedingparagraph.
First,estimating
in a nonexperimental
systemrequiresthatwe statea
conjunction
in thedata.
aboutthedistribution
of therandomvariables
hypothesis
and experibetweenexperimental
(It can be shownthatdistinctions
studies
andthatexperimental
entialsystems
on thisscoreareerroneous
this
also
face
the
must
Second, operational
significance
requirement.)
in a nonexperimental
of causalordering
contextdependsupon the
or nature,
variation
ofsufficient
amongtheconprovision,
byhistory
can be identified.
ditionalstatesso thattheordering
It is herethat
4 HerbertA. Simon,Modelsof Man (New York,I957), ch. i, "Causal Orderingand Identifiability,"p. 26; see also, ch. iii, "On the Definitionof the Causal Relation,"and Guy H. Orcutt,
Review of Economicsand Statistics,XXXIV
"Toward Partial Redirectionof Econometrics,"
I95-200.
(Aug. I952),

This content downloaded from 158.170.10.44 on Tue, 17 Nov 2015 14:50:51 UTC
All use subject to JSTOR Terms and Conditions

Economic Theory,StatisticalInference

529

we are broughtup sharplyagainstthe limitations

imposedby the
uniqueness
and pastness
of historical
events.These limitations
have
appearedto mosthistorians
who have givenmuchthought
to their
tools,notsimply
as a handicapbutas characteristics
thatmakehistory
a discipline
sui generic,
beyondthehelpof theenumerative,
experimentalprocedures
of science.5
reactto these
Frequently
historians
limitations
by asserting
thathistory
is a "consumer
of theories"
but
thatit cannotpretendto generalize
or evento testgeneralizations.6
Evenin thiscase,however,
theyareextremely
charyofexercising
their
consumer
sovereignty.
Popper,forexample,afterimplicitly
limiting
historical
explanation
to only"trivial
universal
laws,"goeson to limit
history
further
to thosepreconceived
theories
thatdetermined
which
factsweredeemedsufficiently
interesting
to be recorded.
Anyonewho has attempted
to explainwhathappenedfromhistoricalevidence
or to present
in an orderly
fashiona setofhistorical
data is notlikelyeveragainto underestimate
theseriousness
of the
difficulties
whichhistory
imposesuponthesearchforcauses.Butthe
stepfromthisrecognition
toa denialthattherules(thatis,thetools)
of scientific
holdforhistorical
is a falseand
explanation
explanation
unnecessary
step.First,the distinction
betweendisciplines
thatconsumetheories
andthosethatproducetheories
is misleading.
The more
sophisticated
version-that
thereare puregeneralizing
sciences
which
testuniversal
hypotheses,
appliedgeneralizing
sciences
whichpredict
specific
events,
and history
whichtriesto explainspecific
events-is
a similarly
emptydistinction.7
Explanation
is prediction:
an explanationlinksa subsequent
eventorprognosis
toa setofinitialconditions,
usingsomestatement
ofinvariant
relationship
to makethelink.And
testing
a universal
hypothesis
consists
in usingtheleastgeneral,
lowestlevelhypothesis
in a deductive
system
as a predictor,
applyingit to
a particular
empirical
case.All three,
then,havein commontheapplicationof hypothetico-deductive
systemsto empiricalmaterial;no
scientist
or economic
historian
can consumea theory
withouttesting
it. Second,repetition
is notthedistinction
betweenthenatural,that
is,experiential
(thatis,historical)
sciences
on theone hand,and the
sciences
experimental
on theother.Historical
events,
in theirinfinite
cannotbe reproduced.
complexity,
Butexperiments
cannotbe repeated
5 See, e.g., the arguments
discussedin PatrickGardiner,The Natureof HistoricalExplanation (Oxford,I952), pp. 28-64.
6 See, e.g., Popper,The Open Society,pp. 246-56, and Lane and Riemersma,
Enterprise,
pp.

522-34.

7 See Popper,The Open Society,pp. 246-56.

This content downloaded from 158.170.10.44 on Tue, 17 Nov 2015 14:50:51 UTC
All use subject to JSTOR Terms and Conditions

530 JohnR. Meyerand AlfredH. Conrad

withall thevariables
thesame,either.
As HaroldJeffreys
pointsout,
if repetition
werethe important
elementin testingscientific
hypotheses,"astronomy
wouldno longerbe regardedas a science,since
the planetshave neverevenapproximately
repeatedtheirpositions
sinceastronomy
began."8 Nor is thecontrol
a disof theexperiment
tinction
An experiment
of principle.
is a fact,a realizedstate.From
a setofinitialconditions,
nature-which
doesnotgivesecondchances
or alternative
courses
in a deterministic
world-setsthecourse.It can
makeno fundamental
difference
in ourreasoning
processes
whether
theconditions
havebeensetby an experimenter
orbynature.
Finally,
itisfrequently
asserted
thatwhilehistorians
mayusetheories
or generalizations
as searchlights
or roadmaps,theycannotbe submittedto preciseteststo determine
whether
theyare or are notapplicable.The putative
reasonsforthishaveto do with"thedifficulty
of formulating
theunderlying
assumptions
withsufficient
precision
and at thesametimein sucha waythattheyare in agreement
with
all therelevant
empirical
material
available."'In short,it is argued
thathistorical
eventsareunique,and thattheevidence,
the
including
lengthof Cleopatra'snose and the presenceof the Archdukeat
Sarajevo,cannotbe reducedto fitthe "underlying
assumptions"
of
a generalization
or universal
In formalterms,
thisimplies
hypothesis.
thatwhilehistorical
explanation
doespresuppose
it must
regularity,
be assumedthattherandomelements
willdominate
thecausalsystem
and thatthe randomelementsare differently
at every
distributed
momentof historical
time.The languagein whichthisproblemis
generally
discussed-the
"infinite
subjectmatter"
of history,
theimponderables,
etc.-simplymasksthe factthat explicitassumptions
abouttherandomvariables
mustbe made in historical
explanation
as elsewhere.
The viewthateverything
or
is unique,thatthereis no repetition
influence
inhumanbehavior
hashada pronounced
constancy
patterns,
upontheselection
ofmaterial
forstudies
in economic
This is
history.
evidenced
by thepreoccupation
withbiographies,
thepreference
for
8 Harold Jeffreys,
ScientificInference(2d ed.; Cambridge,1957),
p. i9i. Much of the
argumentof thissectionis derivedfromthe analysisof probability
and statistical
methodsin
scientificexplanationby Jeffreys
and R. B. Braithwaite,ScientificExplanation(Cambridge,
1955), especiallychs. vi, viii,ix.
9 Quoted in Gardiner,HistoricalExplanation,p. 9i, fromCarl Hempel, "The Functionof
GeneralLaws in History,"Journalof Philosophy,XXXIX (Jan. 1942), 35-48. The quotation
is cited because Gardiner,having almost answeredthe argumentby anticipationwhen he
consideredthe propositionthat historyis sui generis,in a later chapterswallows it whole,
"sufficient
precision"and "relevantempiricalevidence"included.

This content downloaded from 158.170.10.44 on Tue, 17 Nov 2015 14:50:51 UTC
All use subject to JSTOR Terms and Conditions

Economic Theory,StatisticalInference

53I

narrowcasestudiesofunusually
or influential
prosperous
persons
and
groups,and theconcentration
uponverylimitedperiodsin historical
time.Modernexamplesof thistendency
in economic
can be
history
foundin thestudiesconducted
undertheheadingof entrepreneurial
research.
That the entrepreneurial
approach,
withits acknowledged
debtto Schumpeter
(one ofthemostpositivistic
builders
of complete
andpervasive
modelstohavegracedtheeconomic
should
profession),
havetakenthisdirection
is particularly
intriguing.
Thereis nothing
inherently
wrongwiththiskind of historiography;
it is extremely
usefulifrelatedto generalhistorical
patterns
or theories
of economic
behavior.
The difficulty
is thattheserelationships,
whichare per se
inimicalto theprofessions
of uniqueness,
are specified
in onlya few
ofthebetter
entrepreneurial
studies.
It is notthefactthat"in history
anything
can happen"thatmakes
itso difficult
forhistorians
togeneralize
or,byextension,
totesthypotheses.It is wordmongering
to suggestthathistorians
can interpret,
assess,makejudgments,
butnotconcludeor testor generalize.
When
one says"in history
anything
can happen"and therefore
thatthe
student
ofhistory
can onlyattendto theparticular
eventwhichhas
indeedoccurred,
one meansto saythatthereare too manyrandom
variablesin the availablegeneralization
and that,sincewe do not
knowthedistributions
of thesevariables,
we had bettergiveup explanation
and concentrate
uponrecording
factsaboutspecific
events.
Butexplanation
in a historical
system
can be interpreted
as theestimationof probabilities
of transition
fromone stateto a succeeding
state,giventheinitialconditions
and a causallaw or generalization.
In thatinterpretation
thetaskof theeconomic
historian
is to search
out thevariations
in theexogenous
variables,
thatis, to add to the
setofempirically
realizedindependent
conditions.
Unfortunately,
data
arenotfoundwithneatlabels-"condition"
and"observation-sentence"
or "exogenous,
endogenous,
and random."The response
to thisfact
has too oftenbeen to fall back upon uniquenessand to denythe
possibility
of establishing
causalhypotheses.
In the luxuriant
diction
of Croce,"The materialof history
is the singularin its singularity
and contingency,
thatwhichis once and thenis neveragain,the
fleeting
network
of a humanworldwhichdrifts
like cloudsbefore
thewindand is oftentotally
changedbyunimportant
events."
'0 The
resignation
impliedin thisstatement
is, of course,neitheruniversal
10

Quoted in G. Salvemini,Historianand Scientist(Cambridge:Harvard University

Press,

I939),

p. 88.

This content downloaded from 158.170.10.44 on Tue, 17 Nov 2015 14:50:51 UTC
All use subject to JSTOR Terms and Conditions

532 John R. Meyer and Alfred H. Conrad

nor necessary.Considera stochasticalcausal system,containingtwo
identified,
will be labeled"exogsetsof variableswhich,if statistically
and a third
enous"and "endogenous"or perhaps"cause" and "effect,"
set,the randomvariables.This thirdset providesus with the proper
meaning of the uniquenessof historicalevents:within this set is
included the "singularityand contingency"of history,chance,and
systems
value of the individual.Historical,stochastical
the differential
implyingthatthe
have been describedas incompletecausal systems,
funcdistribution
of the excludedvariablesmustbe made an arbitrary
fromthis approachdepends
tion of time."' Economicgeneralization
upon the economichistoriannot for the accumulationof infinite
detailaboutsomeperiodbutfortheconscious,deliberateidentification
probabilities.
of variablesand the estimationof transition
Does thisview simplyforcethe economichistorianintothe position
Not at
of being a minerof cases and factsfor the econometrician?
all. If his intentionis indeed to know about and explain specific,
historicalevents,then it is our contentionthat he must follow the
explanation.To explainan eventone mustbe able
rulesof scientific
given a set of initial
to estimatea range of admissiblepossibilities,
conditionsand a causal or statisticallaw. The phrase "in history
estimationof the
anythingcan happen" can hardlybe a satisfactory
Like
formanyeconomichistorians.
rangeof admissibledevelopments
othereconomistsand otherscientists,
it mustbe theiraim to narrow
the rangeof possibilities,
to explainwhytheparticularrealizeddevelhowever,to read this
opmentdid in fact occur. It is not necessary,
There have been brilliantly
as an insistenceupon strictdeterminism.
ambitiousattemptsby economiststo establishcompletelydetermined
or totalexplanationsof economicbehavior.But theseeconomistshave
of deviationsor exceptions
beentoo oftenloathto admitthepossibility
to theirhypotheses;
theyhave soughtto encompasswithinone model
all thenecessary
the socialbehavior
materialsto explainin itsentirety
abouteconomic
understudy.Outstandingexamplesof totalhypotheses
behaviorcan be found,of course,in the work of Marx, Tawney,
and Selig Perlman,althoughin some cases more ambiSchumpeter,
tion was attributedto these writersby criticsseeking appropriate
The extremeof deterthemselves.
strawmen thanby the originators
of Engels: "In default
minismmaybe foundin thefollowingstatement
11 This approach is developedin greaterdetail, startingin Sec. III below. See Paul A.
Samuelson,The Foundationsof Economic Analysis(Cambridge,I947), pp. 311-20, for an
and stochastical
systems.
interesting
attemptto definecausal. historical,

This content downloaded from 158.170.10.44 on Tue, 17 Nov 2015 14:50:51 UTC
All use subject to JSTOR Terms and Conditions

Economic Theory,StatisticalInference 533

of Napoleon,anotherwouldhavefilledhis place,thatis established
bythefactthat,whenever
a manwas necessary,
he has alwaysbeen
12 A particular
found."
causeis neithera whollyrandomeventnor
a sequencerigidly
ordained
through
all time.
At theextreme
of determinism,
it mightbe thought
thathistory,

since it involvespurposivebehavior,that is, motivationsand goals,

can oftenbe explainedonly teleologically.
Most teleologicalexplanations,however,as has been pointedout by Hempel and Oppenheim
and by Braithwaite,
can be reducedto causal explanationsin which
(i)
intentions,
and (2) the belief,beforethe action,thata courseof
actionwill achievethe intendedresult,providesufficient
antecedent
conditions.3Where intentioncannotbe made evident(a more frequent and seriousproblemin the biologicalsciences),goal-directed
activity,
thatis, teleologicalcausal chains,can be demonstrated
if,but
onlyif,itcan be shownthattherearemanyalternative
activities,
clearly
directedtowarda singlegoal, operatingundervaryingpreconditions.
In any event,teleologicalexplanation,howeverattractive
in suggesting thatwe "understand"
historicalbehavior,has verylittlepredictive
power.It is difficult
to imaginethatmanyeconomicactivitiesrequire
to be explained in terms of inherenttendenciestoward distant
goals.
Narrowingthe range of admissiblepossibilities
may sound deceptivelylike what historiansmean when they asserttheirinterestin
findingparticularcausesby gatheringmoreand moredata aboutspecificevents.But knowingmore about an eventincreasesour chance
ofexplainingtheeventonlyifwe can connecttheinformation
causally.
And theseconnections
dependupon our abilityto subsumethe data,
the event,under appropriatecausal regularities;that is, explanation
and properuse of theoretical
dependsupon theavailability
generalizations.Furthermore,
explaininga specificeventmeans the fittingof
some aspect of a specifictime-and-place
(in our case an economic
aspect) into the narrowestpossiblecausal sequence.Specificexplanationcannotusefullymean thatwe shouldbe able to predictfromthe
set of initialconditionsall the complexcontemporary
characteristics
of thetime-slice.
An economichistorianinterested
in findingexplanationsfor specificeventshas for his goal the ability,given a set of
12 F. Engels to H. Starkenburg,
Jan.25, i894,

quoted in Gardiner,HistoricalExplanation,

p. Ioo.
13 C. G. Hempel and P. Oppenheim,"Studies in the Logic of Exploration,"Philosophy
of Science(Apr. 1948), 135-75, esp. p. 145; Braithwaite,
Scientific
Explanation,esp. pp. 322-25.

This content downloaded from 158.170.10.44 on Tue, 17 Nov 2015 14:50:51 UTC
All use subject to JSTOR Terms and Conditions

534 JohnR. Meyerand AlfredH. Conrad

historical
data,to predictthe likelihoodof the mostexplicitset of
admissibleoutcomes.14

III

overthenatureofhistorical
has had a peculiar
Argument
causality
impacton thestatement
and thenatureof hisof historical
findings
toricalinvestigations,
as we have just seen.In essence,it has bred
extremes.
unnecessary
The continued
existence
of theseextremes
is curiousbecauseboth
are rejected
todayby modernphilosophy
and science.This rejection
holdstrueregardless
of whether
thedataare of historical
or experimentalorigin."5
The presently
is to seek
acceptedscientific
objective
as complete
explanations
as possiblebutto denytotalexactitude
as,
indeed,evenbeingattainable.
remaina goal,sought
Totalexplanations
forbutneverfullyattained.
Withthisadmission
the statement
of humanimperfections,
of a
hypothesis
becomes,
forexample,
in notational
formas follows:
X

a+bY+e

wheretheX and Y can be interpreted

as observable
thea
variables,
and b as behavior
parameters,
and thee as a randomerrorterm.The
important
conceptual
changeis contained,
of course,in theaddition
of thefinalor e term.In thejargonof modernstatistics,
it changes
the statement
of a functional
fromthatof an "exact"
relationship
hypothesis
to a "stochastic"
hypothesis.
The existence
of errors
represented
bythee termis commonly
attributed
totheinfluence
ofomitted
or errors
variables
of observation
in theX variable,
although
thisdisis sometimes
tinction
difficult
to makein practice
and is perhapseven
philosophically
indefensible
as well. Thus the e termrepresents
in
historical
hypotheses
theimpactof thoseinfluences
thathavea sporadic,unsystematic
influence
on thedependent
or X variable;e can
also represent
theerrorsdue to humanfrailties
of observation
or,in
experimental
situations,
theinfluence
of certainvariables
thathavea
14 See C. G. Hempel and P. Oppenheim,"Studies,"and W. W. Leontief,"Note on the
PluralisticInterpretation
of Historyand the Problemof Inter-disciplinary
Cooperation,"Journal
of Philosophy,
XLV (Nov. I948), 617-24.
15Even in the experimentalsciencesthereis always some chance or probabilitythat a
new experiment
will disprovean experiment
thathas previouslystood up to all experimental
tests.The fateof Newton'slaw is an obviousexamplein thisregard.

This content downloaded from 158.170.10.44 on Tue, 17 Nov 2015 14:50:51 UTC
All use subject to JSTOR Terms and Conditions

Economic Theory,StatisticalInference 535

slightinfluence
on X butare notunderexperimental
control.
Much
of modernstatistics
is concerned
and deducingthe
withidentifying
consequences
ofdifferent
behavior
on thepartoferrorterms.
patterns
However,the almostuniversal
behavioral
and certainly
assumption,
themostimportant
fromthestandpoint
is
of thepresent
discussion,
thate is randomly
or unsystematically
To attainthisobdistributed.
jectiveonemusthavea modelthatincludes
all thesystematic
influences
as explanatory
variables,
thatis,as Y terms.Indeed,theexistence
of
an errortermthathas systematic
or nonrandom
behaviorindicates
thata modelis incomplete,
thatit has an insufficient
numberofindependent
or Y-type
variables.
The importance
ofthisseemingly
in theformulaslight
modification
tionof empirical
is tremendous.
hypotheses
It meansessentially
that
one can encompass
or systematic
deterministic
factors
and uniqueor
factors
withina singleand also consistent
unsystematic
model;both
influences
havea rolein thestochastic
formulation
ofhypotheses
and
bothhelpexplainbehavior.
The systematic
factors
explainthe centraltendencies
of behavior,
thatis,the
X' a+ bY X-e
"part"of theabovefunction.
The termcentraltendency
is applied
to thesystematic
components
becausetheseinfluences
are construed
as explaining
somesortofmean,average,
or medianofbehavior.
The remainder,
or nonsystematic
component
of behaviorrepresentedby theerrorterm,has beenin essencethepreoccupation
of
the noncausalschool.An emphasisupon the random,exceptional,
or deviantexperience
perhapsmakessensein the studyof social,
military,
and politicalhistory
sincein thesefieldsthe playof individualfactors
andstrong
personalities
is likelytobe morepronounced
and important.
However,eventherea tendency
towardanalyzing
specific
uniqueinstances
has perhapsbeengrosslyoverdone.
Whateverthemerits
ofthecausalapproach
maybe in theseotherhistorical
it is absolutely
studies,
certainthattheexceptional,
unique,or nonsystematic
experience
is notwhattheeconomist
is seeking
in historical
data. As a socialscientist
witha strongorientation
towardpublic
policyproblems,
theeconomist
seeksto establish
theories
withat least
somegenerality
and timeliness.
He is interested
therefore
in thesystematic,
repetitive
aspectsof economicbehavior.Consequently,
the
economichistorian
shouldnot be surprised
if the economist
shows
littleinterest
in the socialcompetence
and familyrelationships
of

This content downloaded from 158.170.10.44 on Tue, 17 Nov 2015 14:50:51 UTC
All use subject to JSTOR Terms and Conditions

536 JohnR. Meyer and AlfredH. Conrad

somenineteenth-century
it is previously
or conmerchants-unless
comitantly
established
thatsocialcompetence
and family
relationships
helpto explainthesuccesses
orfailures
ofindividuals
in general.The
economichistorian,
in sum,shouldseek the limitedgeneralization
thatis theobjective
of all science;onlyif thatcourseis adoptedcan
economichistory
expectto influence
of economics.
the development
IV
themostfrequently
Undoubtedly
citedobjection
to theemployment
of moreformalquantitative
techniques
in historical
studiesis that
theintrinsic
natureof historical
data and hypotheses
absolutely
preventssuchquantification.
has beenmadein twobasic
Thisobjection
forms:(i) therearesimply
notenoughdataof a quantitative
nature
to permit
theformaltesting
ofquantifiable
and
hypotheses; (2) even
if thesedatawereavailable,
historical
hypotheses
are veryoftenof a
qualitative
or subjective
natureand are therefore
untestable
by quantitative
methods
anddata.
The existence
or nonexistence
of historical
data in a quantitative
formis,of course,a questionessentially
of fact,thenegative
attitude
beingthatsuchdatado notin factexist.Sincethosewhomakethese
statements
are usuallyreputable
historians,
familiar
withthesources
oftheirparticular
periodor periodsofstudy,
it is ratherdifficult
not
to give theirstatements
credence.However,thereare some fairly
obviousreasonswhyonemightcontest
theaccuracy
oftheirhistorical
in regardto data.In thefirst
finding
place,thetraining
ofhistorians
doesnottendto orientinvestigators
towardthediscovery
ofquantitativerecords;forexample,theeconomichistorian
who has received
hisbasictraining
in history
(oftenfroma social,political,
or military
historian)tendsto adoptthehistorian's
preoccupation
withdiaries,
letters,
and contemporary
journalarticlesas sourcedocuments.
By
contrast,
quantitative
records
arelikelytobe foundin different
places;
in therecordsof government
offices,
businessfirms,
savingsinstitutions,insurancesocieties,
agricultural
societies,
etc. The interpretationofsuchdocuments
willoftenrequire,
moreover,
certain
technical
skillsthattheordinary
historian
doesnotpossess.For example,
nineteenth-century
accounting
documents
are crude,to saytheleast,and
theirinterpretation
oftenrequires
theskillsofa reasonably
well-trained
accountant,
preferably
one whois wellversedin thehistory
and deof accounting
velopment
techniques.

This content downloaded from 158.170.10.44 on Tue, 17 Nov 2015 14:50:51 UTC
All use subject to JSTOR Terms and Conditions

Economic Theory,StatisticalInference 537

In support
datamay
ofthecontention
thatthelackof quantitative
be as mucha function
as of actualcirof thehistorical
viewpoint
cumstances
thereis alsomounting
evidence
thatquantitative
historical
data are available.The NationalBureauConference
thatpreceded
thesemeetings
was repletewithillustrative
examples;the workof
Hoffman,
Hansen,Cole, Evans,Beveridge,
Gerschenkron,
Kuznets,
and manyothersprovides
fineearlierexamplesof suchavailability.'
In short,the scarcity
of quantitative
historical
data may be more
imaginedthanrealand ratherreadilyremedied
by a slightredirectionofhistorical
training
and outlook.
The contention
or subjective
thatthequalitative
natureofhistorical
hypotheses
rulesout testing
by quantitative
data posessubstantially
moresubtleproblems
thatarealsosomewhat
moredifficult
toanswer.
Unfortunately,
thesubjecthas beenbadlyobscured
by a numberof
Thusthemostrewarding
misconceptions.
this
to answering
approach
assertion
wouldappearto be essentially
negative,
statingwhatquantification
doesnotmeanor requireand onlyimplicitly
whatit does
mean.
To begin,quantification
does not require,as is oftenthought,
a
scaleof measurement
continuous
forall thevariables
involved.It is
thattherebe classes,
onlynecessary
thatis,thatcertain
oftheobservationsaredifferentiable
fromtheothers.
Thereneedbe,moreover,
no
morethantwoclasses;thusan investigator
mightneedto knowonly
theansweris yesor no,or thecoloris blackor white,etc.
whether
A largenumber
ofhistorical
involve
suchelementary
classihypotheses
fication
schemes.
A commondifficulty
in thepasthas beenthatone
manmayconcentrate
on counting
theitemsin one box and another
manwillcountonlytheitemsin theotherbox.As in thestoryofthe
blindmenandtheelephant,
theresultis notsurprisingly
verydifferent
interpretations.
Two good examplesof thisdifficulty
can be cited.
First,thedifference
of opinionbetweenSeligPerlmanand Sumner
Slichteraboutthebasesof unionorganization
mightbe explained
bythefactthatwhereas
Perlman's
investigations
usuallyconcentrated
on declining
Slichter
industries,
focused
hisattention
uponexpanding
sectorsof the economy.
The conflict
of interpretation
betweenthe
Hammondsand Ashtonis similarly
reducible
to theirconcentration
on theEnglishindustrial
boxesofevidence
upondifferent
revolution.
16It is interesting
to note thatwhen one liststhe good quantitative
work done in the field
of economichistory,it has more oftenthan not been done by someoneoriginallytrainedin
economics.

This content downloaded from 158.170.10.44 on Tue, 17 Nov 2015 14:50:51 UTC
All use subject to JSTOR Terms and Conditions

538 JohnR. Meyerand AlfredH. Conrad

Clearly,
a goodinvestigator
shouldcountall classes-andintroduction
of thissimpleprinciple
intohistorical
studieswouldbe a significant
methodological
advancein and ofitself.
Quantification
also does not requiredirectobservation
of every
stateofmind,everymotive
involved
in theparticular
aspectofhuman
behavior
understudy.Suchinsistence
on directdataaboutqualitative
called
orsubjective
mentalstateis akintowhathasbeenappropriately
"questionnaire
myopia,"
whichleadsthoseso afflicted
to insistthatthe
is to ask them.For
onlywayto findout whatpeopleare thinking
example,the relianceupon diaryand personallettersourcesthat
characterizes
a good deal of historical
writing
is basicallyequivalent
to a questionnaire
As socialpsychologists
havepointedout
approach.
manytimesand as modernpoll takershave discovered
on several
thequestionnaire
occasions,
procedure
maybe one of theworstways
of finding
outpeople'srealmotivations.
Becauseof thedifficulties
involved
in directly
measuring
subjective
mentalstates
orattitudes,
a majorpreoccupation
ofmodern
psychology
has beentoinferormeasure
mentalstatesindirectly.
Factorand principal component
analysis,
scalingtechniques,
and muchof modern
learning
theory
areaimedat achieving
thisobjective.
Withthesetechniquesan attempt
is usuallymadeto inferbackwardfromcertain
objectiveor observable
measures,
suchas testscores.The historian
cannot,of course,setup suchteststo measurethe attitudes
of the
does
deceasedindividuals
withwhomhe is dealing.This deficiency
not,however,
constitute
anyfinalor absolutedeterrent
becauseobjectiveevidence
ofmentalattitudes
otherthan
is oftenavailablein forms
testscores.Such evidenceis commonly
generated,
forexample,in
thenormalcourseof dailybusiness
events.
Thus thebehavior
of certainaccounting
values,suchas thelevelof liquidassets,therateof
investment,
and the utilization
of different
financialsources,may
yieldexcellent
objective
evidenceon the mentalpreoccupations
and
of businessmen.
In fact,the way in whichbusinessmen
attitudes
respondto thesevaluesis as likelyto be indicative
of theirattitude
and salesexpectations,
towardliquidity
preference
etc.,as whatthey
enterin theirdiaries.
All thesetechniques
of course,to nothingmoreor
are equivalent,
lessthantheutilization
ofindirect
evidence
to verify
a hypothesis
that
cannotbe directly
Thusin a largenumber
of casesa historiverified.
cal investigator
can deducethe quantitative
consequences
of certain
behavioral
hypotheses
evenif thehypothesis
itselfis qualitative;
or,
in thesamevein,he canveryoftendeducecertain
indirect
quantitative
This content downloaded from 158.170.10.44 on Tue, 17 Nov 2015 14:50:51 UTC
All use subject to JSTOR Terms and Conditions

Economic Theory,StatisticalInference 539

of behavioral
in
consequences
thatmaybe quantitative
hypotheses
but lack directquantitative
character
evidence.The firstcase,the
use of quantitative
evidenceto verify
a qualitative
hypothesis,
is perhapsthemostimportant
to theeconomichistorian.
Let us illustrate
thetechnique
bycitingspecific
examples.
Example i: In a paper on Negro slaveryin the antebellumSouth presented
beforethe NationalBureauof EconomicResearchConference
on Researchin
Incomeand Wealth,thepresentauthorswerefacedwiththeproblemof quantitatively
testingthe old historical
questionaboutwhetherthe typicalsouthern
gentlemanplantercould bringhimselfto indulgein the slave trade.Diaries
have beensearchedmanytimeswithdifferent
searchers
arrivingat verydifferent results.In essence,thesedifferences
developedfromthe fact thatit was
consideredsomething
less thangenteeland refinedfora southerngentleman
to engagein slave breedingand trading.As a consequence,
slave transactions
in diaryentrieswere ofteneuphemistically
describedas operationsto get rid
of some troublemakers
or younglaggards.Those who like to retainnotions
aboutthe superiorrefinement
and gentility
of the southernplantationculture
usuallychoseto interpret
thesediaryentriesat face value; thosewho denied
anysuchqualitiesin theantebellum
Southchose,of course,to look upon these
diaryentriesas mereeuphemisms.
Withinthe contextof the diarydata there
was obviously
no wayof resolving
thesedifferences.
One could,however,
deduce
the typeof age and sex distribution
of the Negro populationthatwould be
likelyif slave breedingand tradingwas widelyindulgedand what pattern
would be likelyif it was not indulged.Data on such populationdistributions
are availablein earlyAmericancensusesand when obtainedwere foundto
theskeptics,
verify
hencejustifying
theuse of thewordeuphemism
as descriptiveof thediaryentries.
Example2: MichaelLovell,in an articleon the Bank of Englandto appear
in Explorations
shortly
in EconomicHistory,
reconsiders
theoftendebatedquestionof whether
theBankof Englandwas engagingin centralbankingpractices
in. theearlyeighteenth
century;
herethe diaryentries,
in thiscase the deliberatelyeditedrecordof bank board meetings,are confusingand inconclusive.
However,thereare availabletime serieson eighteenth-century
bankruptcies,
bankreserve
ratios,and discountrates.Lovellhas inferred
theresultsthatmight
be expectedin the behaviorof theseseriesif a centralbankingpolicywas
followedand he has testedhis deductionsagainstthe actual data. He found,
to others,
thatcentralbankingapparently
contrary
emergedat a veryearlydate
in eighteenth-century
England.

The agreement
ofcertain
actualconditions
withdeducedconditions
is necessarily
doesnotimply,
ofcourse,
the
corthat original
hypothesis
rect.This is so becausetheremaybe otherinitialhypotheses
from
can be deduced.We are able,in
whichthesameobserved
conditions
to rejecta hypothesis
overall
butnotto acceptone hypothesis
short,
In agreement
withtheprinciple
others.
enunciated
in thelastsection,

This content downloaded from 158.170.10.44 on Tue, 17 Nov 2015 14:50:51 UTC
All use subject to JSTOR Terms and Conditions

540 JohnR. Meyer and AlfredH. Conrad

and
was formulated
it is highlyprobable
thata particular
hypothesis
testedin thefirst
placebecauseit was suggested
by otherestablished
information
aboutthesubject.The empirical
testin thatcase serves
beliefsin the
our subjective
essentially
to strengthen
at a minimum
ofthehypothesis.
truth
Andthatis no littleor meanadvance.
It is also worthnotingthatoncetheconsequences
of a hypothesis
data problems
are likelyto prove
havebeenthoroughly
recognized,
Thusworking
of
lessseverethanfirst
believed.
outtheconsequences
often
reveals
ofa largernumber
a hypothesis
thatthebehavior
ofavailable quantitative
seriesis relevant
to testinga hypothesis
thanwas
in
initially
believed
tobe thecasewhenthehypothesis
was considered
itssimpleundigested
state.
Theinverse
oftheindirect
deduction
ofconsequences
ofthisproblem
is thelogicalissueof thecounterfactual
conditional.
It has beenrecently
arguedbysomehistorians
and philosophers
ofhistory
thatthe
in historyto
inability
to reduceall lawlikeconditional
statements
verifiable
propositions
makescausalexplanation
imandgeneralization
in history.'7
possible
Forexample,
to assertthat"IftheCivilWarhad
notoccurred,
the Southwouldhave abolishedNegroslaveryin an
orderly
fashion
withinone generation"
is to proposea counterfactual
or subjunctive
conditional
forwhichno procedure
of verification
or
is possible.
falsification
However,granted
thatcounterfactuals
cannot
be directly
tested,
itis possible
toconsider
thestatement
withina valid
deductive
of the
system,
independently
of the acknowledged
falsity
conditional
clause.Then,without
beingableto demonstrate
anygiven
instance
of thecounterfactual,
it maybe possibleto verify
or falsify
someotherproposition
higherup in thedeductive
chain.The question
of whether
thenegative
of the (falsified)
higherlevelconditional
is
cotenable
withthesubjunctive
prediction
can thenbe asked.In the
slavery
examplewe examined
thehigherlevelhypothesis
thatslavery
wasnotprofitable
in theantebellum
South,fromwhichtheconditional
sentence
aboveis derived.The falsification
of the higherlevelhypothesis,
whileit maynotprovidefinalproof,
willsupport
something
stronger
thanan indefinite
interpretation.
It is notourintention
to try
toargueawaythelogicalproblem
ofthecounterfactual
conditional
for
historical
causality,
butsimply
toassert
thatitis notin principle
necessaryto treathistorical
counterfactuals
as alwaysirreplaceable.
If we
recognize
theposition
of a subjunctive
conditional
in itshypothetico17 See, e.g., StuartHampshire,"SubjunctiveConditionals,"
Analyis,IX (Oct. I948), 9-I4.

This content downloaded from 158.170.10.44 on Tue, 17 Nov 2015 14:50:51 UTC
All use subject to JSTOR Terms and Conditions

Economic Theory,StatisticalInference

54I

deductive
system,
we canfrequently
deviseat leasta testof cotenability.l8

A morescientific
tothestudyofeconomic
approach
hasbeen
history
advocated
in thepreceding
discussion.
This raisestheinevitable
questionofwhether
suchadvocacy
extends
to theintroduction
ofthevery
formaland complextechniques
of modernprobability
statistics
into
historical
studies.Answering
thatquestionin a simplecategorical
fashionis difficult,
sincethereare at issuesuchcomplexproblems
as
thecentral
disagreements
separating
theso-called
subjective
and objectiveprobability
schools.
The objections
to usingformalprobability
testsmaybe broadly
intotwomajorcategories.
classified
First,thereis a seriousquestion
abouttheappropriateness
of usingprobability
modelswithhistorical
data.Although
all therandomness,
and otherassumptions
normality,
whichcommonly
underlyprobability
modelsmightbe met in the
scientific
or in a well-designed
laboratory
sampleor questionnaire
thereis littledoubtbutthattheassumptions
study,
arenotmetbymost
economic
historically
generated
data.
Evenwiththemanyrecent
advances
inthedevelopment
ofanalytical
toolsforuse witheconomictimeseries,the application
of formal
econometric
or statistical
techniques
to theanalysisof suchdata remainsfraught
withhazard.For example,the economicstatistician
mustusuallybehave,forwantofbetter
knowledge,
as if his totaldegreesoffreedom
equalthetotalnumber
ofavailableobservations;
becauseofthelackofrandomness
in thegeneration
of his data,thisasis rarely
sumption
met.Similarly,
mostprobability
testsarebasedupon
theassumption
thatsamplingis froma largeuniverse
and involves
forinferring
techniques
theproperties
of theuniverse
froma small
sample.Buttheeconomicstatistician-cum-historian
usuallycannotbe
he has in factso fewobservations
selective;
thathe mustemployall
thatareavailable.Nor is thisproblem
solvedeitherbythemerepass18 Excellenttreatments
of the counterfactual
conditionalmay be foundin Nelson Goodman,
"The Problemof Counterfactual
Conditionals,"Journalof Philosophy,XLIV (Feb. I947),
II3-28,
and in Braithwaite,ScientificExplanation,pp. 295-3I7.
The slaveryexamples are
froman unpublishedpaper,AlfredH. Conradand JohnR. Meyer,"The Economicsof Slavery
in the Ante-bellumSouth," presentedat the Conferenceon Researchin Income and Wealth,
NationalBureau of EconomicResearch,at Williamstown,
Mass., Sept. 1957.

This content downloaded from 158.170.10.44 on Tue, 17 Nov 2015 14:50:51 UTC
All use subject to JSTOR Terms and Conditions

542 John R. Meyer and Alfred H. Conrad

ingoftimeand theaccumulation
of additional
dataon new yearsor
bytheextension
ofresearch
intothepastandtheaccumulation
ofnew
dataon old years.Suchextensions
canmakean empirical
studyapply
toa farwiderrangeofeconomic
structure
thancanusuallybe encompassedwithina tractable
statistical
hypothesis
or model.That is, the
thefewer
greater
thenumber
ofyearscovered
bytheempirical
study,
or structural
institutional
conditions
thatcanbe considered
fixed,and
thegreater
theneedforexpanding
thenumberof speconsequently
variables
includedin themodel.This is essentially
cificexplanatory
thedifficult
problem
of"structural
change"thatmakestheeconomic
theorist's
box of ceteris
conditions
something
elsethanfixed.
paribus
even
Thisproblem
hasplaguedmanymodern
econometric
applications,
haveusuallybeenconfined
to limitedtimespans
thoughthesestudies
of betweentwenty
and thirty
years.
The limitation
on the yearsincludedin thesestudieshas not,of
beendueeither
limior to theadmitted
course,
to merecapriciousness
tationson availabledata.Evenwhenlongertimeseriesare available
it is notuncommon
to findtheinvestigator
limiting
his attention
to
a fewspecific
years;waryears,
drought
years,
severedepression
years,
eliminated.
or yearsofsimilarcatastrophic
arecommonly
occurrences
Thisselection
ofdatais obviously
dictated
bythefundamental
scientific
to a hypreceptof trying
to controlas manyinfluences
extraneous
undertestas possible.
As was pointedoutin SectionIII, the
pothesis
modernscientist
seeksthemostsimpleexplanatory
obtainhypothesis
able thatis consistent
withhis objective
of includingall systematic
influences
in hismodel.
Bycontrast,
it has beenfrequently
asserted
byhistorians
and others
to explainnotonlyhowtheindividual
thatthenecessity
or groupbehavedbutwhyinvolves
a longchainofcausesinfinitely
farbackinto
thepast.'9Thisharpingon an infinite
regress
of explanation
backto
somefirst
causeis reallya confusion
between
thenecessity
of a completeexplanation,
a totalcause,as opposedto thespecification
of the
sufficient
antecedent
conditions
andappropriate
generallawsand,possibly,a necessary
condition.
The criterion
forsuppressing
"causalancestors"
(and causallaws) shouldbe,in keeping
withgeneralscientific
theeffect
objectives,
uponthepredictive
poweroftheexplanation.
This
is whatPopperreferred
to whenhe spokeofthefactthatwe "tacitly
assumea hostofrather
trivial
universal
laws"and concentrate
upona
19 See, e.g., Frank H. Knight,"The Limitationsof ScientificMethod in Economics,"in
RexfordG. Tugwell,ed., The Trend of Economics(New York, I924), esp.pp. 251-52; see
also Croce,Theory,p. 65.

This content downloaded from 158.170.10.44 on Tue, 17 Nov 2015 14:50:51 UTC
All use subject to JSTOR Terms and Conditions

Economic Theory,StatisticalInference 543

sufficient
condition,
assuming"certaininitialconditions
hypothetically."20 Mostjournalistic
causalexplanations,
clingingto the canon
thatthereis nothing
so deadas yesterday's
news,havelittlepredictive
power;at theotherextreme,
it is notnecessary
theseto demonstrate
quencebetween
theriseofProtestantism
andthedevelopment
ofcapitalismin orderto explaintheGreatDepression
of thelastquarterof
thenineteenth
century.
Thereis obviously
no singleruletobe offered;
alsoobviously,
a condition
thatcannotreasonably
be assumedshould
notbe omitted
frommention.
Firstcausesaside,insufficiency
in explanationis morelikelyto occurwhereconditions
in
are catalogued
detailand thenecessary
empirical
are notmadeexplicit.
regularities
Butall thisis smallcomfort
to theempirical
investigator
attempting
to givehis hypotheses
testsof moreformalcontent.
He is obviously
caughtin a dilemmawherein
hisefforts
to obtainmorequantitatively
reliabletestswill ofteninvolvehim in unwanted,
intractable
complexity.
However,evenif thisdilemmaand therelateddifficulties
created
bythe"unrealistic"
assumptions
ofobjective
probability
modelscould
be handled,and thereare manyingenious
devicesavailabletodayto
makehandlingthemmorenearlyattainable,
mostof theformalstatistical
probability
testsforhypotheses
areoverlystringent.
Aboveall,
theyassumeno priorknowledgeaboutthe probableaccuracyof a
hypothesis
undertest.This is obviously
a ratherdubiousassumption
sincean investigator
wouldrarely
testa particular
modelifhe didnot
attachan a prioriprobability
greater
thanzeroto itschancesofbeing
A strictmechanical
correct.
application
of probability
teststherefore
raisestheseriouspossibility
ofrejecting
hypotheses
whentheyshould
notbe rejected(althoughit shouldbe recognized
thatthistendency
towardtooeasyrejection
maybe partially
ormorethanoffset
bycounterbalancing
influences,
suchas overestimation
of thedegreesof freedomcontained
in historical
timeseries).
Despitethesemanydrawbacks
to formaltests,thereare substantial
and, in our view,almostcompelling
advantages
to usingobjective
probability
testswherever
thereis at leastreasonable
approximation
between
theassumptions
oftheprobability
modelsand theactualcircumstances
whichgenerated
thedata.Unquestionably
thegreatest
of
theseadvantages
is thatthetestsare widelyknownand well understood.Thisgreatly
simplifies
thecommunication
ofscientific
findings,
sincetheveryformality
or rigidity
of thetestsminimizes
theroleof
personalpredilections
or a prioriattitudes
in assessing
theempirical
20Popper, The Open Society,p. 250.

This content downloaded from 158.170.10.44 on Tue, 17 Nov 2015 14:50:51 UTC
All use subject to JSTOR Terms and Conditions

544 JohnR. Meyerand AlfredH. Conrad

"a significant
findresults.
Phrasessuchas "a significant
difference,"
occurin
ing,""a reliablepredictor,"
and manyothersthatregularly
havea
empirical
studies,
whether
or nottheyareformalin character,
definite
probability
meaningwheninterpreted
in termsof objective
tests.(Thoughsuchphrasesarefreely
usedin theabsenceof formal
lessthan
is frequently
techniques,
theirmeaningin suchapplications
gain
universally
understood.)
In addition,
thereis at leasta heuristic
Explicitly,
arisingfromthefactthattheformaltestsarequantitative.
theformaltestsattachan actualnumerical
probability
to thecorrectresults.
This intronessofthehypothesis
in thelightoftheobserved
ducesthequestionofrelative
intotheempirical
procedure
plausibility
and consequently
to scalethedegreeof belief,
helpstheinvestigator
an intrinsically
ordinalconcept
at theveryleast,thatshouldbe placed
in thehypothesis.
Thereare,in sum,substantial
to
as wellas disadvantages
advantages
in theevaluation
of histheintroduction
of moreformalprocedures
arises:Is therea satisfactory
The question
therefore
toricalhypotheses.
disadvantage
withminimum
compromise
thatembodies
maximum
advantage?
Ideally,
thebestprocedure
wouldappeartobe oneinwhich
testswereadaptedoraltered
totakeaccountofa maximum
theformal
ofa priori
Thisleads,admittedly,
toan essentially
Bayesian
information.
The difficulty
inference.
of the Bayesianapapproachto statistical
thatitbogsdownin a morassofsubjectivism
unproachis,ofcourse,
andprobabilities
arefullystated.Thesearediffilessthepriornotions
As such,one
to communicate
cultmatters
and completely.
effectively
be
achieved.
wonder
the
ideal
can
ever
may
whether
at leastsomeguide,
Shortoftheideal,theformaltestsdo constitute
guide,to determining
the
furthermore
a well-understood
andobjective
thatshouldbe placedin a givenhypothesis.
kindofconfidence
If the
natureof mostof the testsis remembered,
and if
overlystringent
is madeforthediscrepancies
between
theunderlying
proper
allowance
in theactualworld
andtheconditions
existing
probability
assumptions
thatpasstheformaltestshouldgain,at
ofhistorical
data,hypotheses
intuitive
attraction.
substantial
a minimum,
If we take fromhistorythe discussionof why, how and whereforeeach thing
was done and whetherthe resultwas what we should reasonablyhave expected,
what is leftis a cleveressay but not a lesson,and while pleasingfor the moment
of no possiblebenefitforthe future.21
Polybius
Harvard University
JOHN R. MEYER AND ALFRED H. CONRAD,
21

Quoted in the Times Literary Supplement (London) (July19,

1957),

p.

440.

This content downloaded from 158.170.10.44 on Tue, 17 Nov 2015 14:50:51 UTC
All use subject to JSTOR Terms and Conditions