Full text: Study week on the econometric approach to development planning

in the entire domain of natural and human sciences, the treatises of 
philosophy of science have very little if anything to say about the 
general principles of model building. 
It is not my intention to give here a general review of the prin 
ciples of model building. My main point is to emphasize a funda- 
mental distinction between three aspiration levels in scientific model 
building. The first is fact finding, the second is understanding, the 
third is prediction. Correspondingly, we may talk about 
(1) descriptive moc 
(2) explanator. a: 
(3) forecasting moc. 
Fact-finding answers questions of the type: « What has happen- 
ed? » The answers are given by observed actual facts, and the 
observations are organized in a more or less systematic fashion into 
a descriptive model. Explanatory models answer questions of the 
‘ype « Why has it happened? » Speaking broadly, the answers in- 
volve an element of causal inference, and the model makes a joint 
construct of theoretical analysis and empirical observation. Forecast- 
ing models answer questions of the type « What will happen? » 
Explanatory models are based on past experience, and when such 
a model is used for prediction it constitutes a forecasting model. 
The three types of models thus represent stages of scientific evo- 
lution towards higher aspiration levels. If we examine the various 
branches of scientific endeavour from this point of view, we find that 
there are great differences. Some sciences stride along happily at the 
level of fact-finding and description. Others have succeeded to 
assess a stable causal pattern in the observed facts, thereby ascending 
to the level of reliable explanatory models. Still more advanced are 
the sciences where the explanatory models are reliable enough to 
provide valid forecasts of future events. 
Economics and econometrics, I believe, have reached this third 
stage rather recently. The situation is far from uniform. Certain 
areas of economics are well covered by reliable explanatory and fore- 
[1] Stone - pag. 91

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