— Calvin and Hobbes (@Calvinn_Hobbes) June 20, 2016
Milton Friedman and many other economists argue that the assumption of rational behavior does not have to be true, rather we can take this assumption “as if” it were true. The argument also says, that it is important to make realistic predictions with these (unrealistic) assumptions.
“To put this point less paradoxically, the relevant question to ask about the “assumptions” of a theory is not whether they are descriptively “realistic,” for they never are, but whether they are sufficiently good approximations for the purpose in hand. And this question can be answered only by seeing whether the theory works, which means whether it yields sufficiently accurate predictions.” (Friedman, Milton 1953: Essays in Positive Economics. Chicago: University of Chicago Press, p. 14; I found the source here and here).
A lot has been written about this methodological perspective (cf. the blog post on the now closed blog “Unlearning Economics“). A starting point for a critique of Friedman’s methodological perspective you may find here (or here in German language).
My critique can be summarised in two sentences: “Trees sneeze – that’s where the wind comes from”. Would we be satisfied with this explanation or prediction?