The Regrettable Loss of Mathematical Molding in Econometrics - Mechanism and Causality in Biology and Economics - page 58

Chapter 4
The Regrettable Loss of Mathematical
Molding in Econometrics

Marcel Boumans

Abstract Although most accounts on causality discuss the specific role statistics and
theory should have, it is taken for granted that they at least have a role in finding causal
structures. The role for mathematics is not so obvious. However, before what is called
the Probabilistic Revolution in econometrics, identification of causal relations was not
a matter of economic-theoretical and statistical significance alone. Mathematical
molding was considered as an essential tool in finding significant causal factors. In
the 1940s, mathematical molding disappeared in the changeover from methods to
specify causal mechanisms of business cycles to methods to identify economic
structures, that is, invariant relationships underlying the workings of an economy.
Mathematical molding could fulfill its role in modeling business cycle mechanisms
because of the assumed close connection between mathematical representations of the
business-cycle phenomenon and those of the explanatory mechanism. When the
econometric program shifted its focus from mechanisms explaining phenomena to
uncovering structural relationships, direct feedback from the phenomenon to the
mechanism was lost and the role of mathematical molding ceased to exist.

1 Introduction

Although most accounts on causality discuss the specific role statistics and theory
should have, it is taken for granted that they at least have a role in finding causal
structures. 1 The role for mathematics is not so obvious. Exemplary for this general

1

See, for example, the opening sentence of Aldrich's ( 1989 ) paper on Autonomy: “Knowledge of
structure is valuable and available - but only to those prepared to use both economic theory and
statistical analysis.”

M. Boumans ( * )
Amsterdam School of Economics, University of Amsterdam, Valckenierstraat 65,
1018 XE Amsterdam, The Netherlands
Erasmus Institute for Philosophy and Economics, Erasmus University Rotterdam,
Rotterdam, The Netherlands
e-mail: [e-mail]