But meeting the above conditions is not enough. Scientific theories
must also pass the crucial hurdles of testability, verifiability,
refutability, falsifiability, and repeatability. Yet, many economists
go as far as to argue that no experiments can be designed to test the
statements of economic theories.
It is difficult - perhaps impossible - to test hypotheses in economics
for four reasons.
a. Ethical - Experiments would have to involve human subjects, ignorant
of the reasons for the experiments and their aims. Sometimes even the
very existence of an experiment will have to remain a secret (as with
double blind experiments). Some experiments may involve unpleasant
experiences. This is ethically unacceptable.
b. Design Problems - The design of experiments in economics is awkward
and difficult. Mistakes are often inevitable, however careful and
meticulous the designer of the experiment is.
c. The Psychological Uncertainty Principle - The current mental state
of a human subject can be (theoretically) fully known. But the passage
of time and, sometimes, the experiment itself, influence the subject
and alter his or her mental state - a problem known in economic
literature as "time inconsistencies".
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