A NOTE ON FUNDAMENTAL THEORY AND IDEALIZATIONS IN ECONOMICS AND PHYSICS

Modern economics, with its use of advanced mathematical methods, is of ten looked upon as the physics of the social sciences. It is here argu ed that deductive analyses are more important in economics than in phy sics because the economists more seldom can confirm phenomenological l aws directly. The economist has to use assumptions from fundamental th eory when trying to bridge the gap between observations and phenomenol ogical laws. Partly as a result of the difficulties of establishing ph enomenological laws, analyses of idealized 'model-economies' play a mo re important, but mainly heuristic role, in economics.