Review of Hsiang-Ke Chao’s Representation and structure in economics: the methodology of econometric models of the consumption

This volume derives from Chao's 2002 University of Amsterdam doctoral thesis. Chao contrasts the received and the semantic views of theory in economics and comes down clearly in favour of the latter. He illustrates his arguments with discussion of demand theory, the consumption function, and the so-called LSE approach to econometrics. The account is commendably (perhaps overly) concise and is generally clear. However, it betrays both its vintage and its thesis origin. In this review, I discuss Chao's views on structure primarily in relation to demand theory. The received view sees theory as consisting of a set of abstract axioms plus a set of correspondence principles which link the axiomatic relationships to the world. So-called modern (i.e., pre-behavioural) demand theory appears to conform to this paradigm—the theory consists of a set of axioms defining the relation ≽ ≽ ≽ ≽ and a correspondence rule which interprets ≽ ≽ ≽ ≽ in terms of choice. Unfortunately, the remainder of the economics corpus fits the received view less well. The semantic view is not susceptible to such a precise characterization. It relates to a broad collection of less abstract approaches to the role of theory in which theory and structure become closely related concepts. Theory posits a structure, or a range of structures, to which the world corresponds, either isomorphically or by analogy. Models have structure and their structures purport to represent the structure of the world— hence the title of the book. Models, and hence implicitly also theories, are partial accounts of a complicated reality and therefore necessarily simplify. Model structures can therefore only aspire to being partial representations, in the same way that a road map is, by design, a partial representation of the terrain. Alternative partial representations are possible—road maps and topographical maps offer different representations, each of which has its own validity. Even if it were desirable, an isomorphic correspondence