Giffen's Paradox and Falsifiability

Abstract

This paper considers the methodological problem which the Giffen paradox poses for the economist intent on establishing the empirical status of microeconomic theory. We then turn to more general considerations of the falsifiability of economic theory based on discussions by Adolf Grünbaum. These considerations lead us to reject Louis De Alessi's proposal for rectifying the problem of the Giffen paradox. Finally, we turn to the problem of ceteris paribus as it bears on De Alessi's argument, and observe that he has not resolved this problem.Giffen Paradox, Falsifiability, Microeconomic Theory