Reduction and Elimination in Philosophy and the Sciences
Reduction and Elimination in Philosophy and the Sciences
Reduction and Elimination in Philosophy and the Sciences
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Reduc<strong>in</strong>g Complexity <strong>in</strong> <strong>the</strong> Social <strong>Sciences</strong><br />
Me<strong>in</strong>ard Kuhlmann, Bremen, Germany<br />
1. Explanation, <strong>Reduction</strong>, <strong>and</strong> Mechanisms<br />
<strong>in</strong> <strong>the</strong> Social <strong>Sciences</strong><br />
<strong>Reduction</strong>s are attractive s<strong>in</strong>ce <strong>the</strong>y enhance <strong>the</strong> unity of<br />
our knowledge <strong>and</strong> allow for a sparser ontology or conceptual<br />
scheme. <strong>Reduction</strong> is <strong>in</strong>timately connected with explanation<br />
s<strong>in</strong>ce reductive relations between different <strong>the</strong>ories,<br />
i.e. ‘<strong>in</strong>ter<strong>the</strong>ory relations’, figure prom<strong>in</strong>ently <strong>in</strong> at least two<br />
of <strong>the</strong> ma<strong>in</strong> accounts of explanation. Accord<strong>in</strong>g to <strong>the</strong> cover<strong>in</strong>g<br />
law model, explanations of phenomena or special<br />
laws are viewed as derivations from (more) general laws,<br />
or conversely, <strong>in</strong> <strong>the</strong>ir reduction to more general laws. In<br />
<strong>the</strong> unificationist account, <strong>the</strong> core of explanations is considered<br />
to be <strong>the</strong>ir unify<strong>in</strong>g power. Concern<strong>in</strong>g <strong>the</strong> explanation<br />
of special laws, for <strong>in</strong>stance, explanation consists <strong>in</strong><br />
<strong>the</strong> overall reduction of <strong>in</strong>dependent laws, says <strong>the</strong> unificationist.<br />
Eventually, certa<strong>in</strong> causal <strong>the</strong>ories of explanations<br />
can also be rated as reductive <strong>in</strong> <strong>the</strong> sense that a diversity<br />
of phenomena is subsumed under universal generat<strong>in</strong>g<br />
mechanisms.<br />
In <strong>the</strong> social sciences (i.e. <strong>in</strong>clud<strong>in</strong>g economics)<br />
methodological <strong>in</strong>dividualism, first <strong>in</strong>troduced by Max<br />
Weber, makes a clear <strong>and</strong> still today very <strong>in</strong>fluential claim<br />
about how explanations ought to proceed, namely <strong>in</strong> terms<br />
of micro reductions to (<strong>in</strong>dividual) human actions (see<br />
Udehn 2001 for a comprehensive account). For this<br />
reason it is often said that methodological <strong>in</strong>dividualism<br />
expresses a particular version of reductionism, applicable<br />
<strong>in</strong> <strong>the</strong> social sciences. Methodological <strong>in</strong>dividualism is a<br />
bottom-up approach s<strong>in</strong>ce <strong>the</strong> start<strong>in</strong>g po<strong>in</strong>t is always <strong>the</strong><br />
bottom level of <strong>in</strong>dividual constituents. The ma<strong>in</strong> thrust of<br />
methodological <strong>in</strong>dividualism that matters for my concerns<br />
is <strong>the</strong> emphasis that social phenomena cannot be<br />
sufficiently understood by analys<strong>in</strong>g statistical correlations<br />
between macro quantities, e. g. macroeconomic variables,<br />
but that it is necessary to refer to <strong>the</strong> micro level of actors.<br />
However, as I will show below, very often not all micro<br />
details are relevant, <strong>and</strong> moreover, <strong>the</strong> attention must not<br />
be restricted to <strong>in</strong>dividuals <strong>in</strong> isolation.<br />
Friedrich August von Hayek, explicitly endors<strong>in</strong>g<br />
Weber’s doctr<strong>in</strong>e of methodological <strong>in</strong>dividualism,<br />
underl<strong>in</strong>ed that an underst<strong>and</strong><strong>in</strong>g of economic phenomena<br />
presupposes explanations <strong>in</strong> terms of rational actions by<br />
economic agents. Hayek’s ideas must not be<br />
misunderstood as a form of rationalism s<strong>in</strong>ce he even<br />
emphasizes <strong>the</strong> limits of rationalism <strong>in</strong> <strong>the</strong> sense of social<br />
plann<strong>in</strong>g <strong>and</strong> control, argu<strong>in</strong>g that economic phenomena<br />
often emerge as un<strong>in</strong>tended consequences of <strong>the</strong><br />
economic agent’s actions, whose perspectives are always<br />
very limited (cf. Heath 2005). For this reason, systematic<br />
economic analyses should always start by consider<strong>in</strong>g <strong>the</strong><br />
perspective of <strong>the</strong> economic agents, i. e. by follow<strong>in</strong>g <strong>the</strong><br />
doctr<strong>in</strong>e of methodological <strong>in</strong>dividualism. In <strong>the</strong> 1980s, <strong>the</strong><br />
advent of rational choice <strong>the</strong>ory <strong>and</strong> <strong>in</strong> particular of game<br />
<strong>the</strong>ory triggered new debates about methodological<br />
<strong>in</strong>dividualism, argu<strong>in</strong>g aga<strong>in</strong> that “<strong>the</strong>re do not exist<br />
collective desires or collective beliefs” (Elster 1986: 3).<br />
These ideas shed some light on modern agent-based<br />
models of f<strong>in</strong>ancial markets, studied among o<strong>the</strong>rs by<br />
physicists. In both cases it is assumed that <strong>the</strong><br />
constituents of <strong>the</strong> system have no access to <strong>in</strong>formation<br />
on <strong>the</strong> level of <strong>the</strong> whole system. Never<strong>the</strong>less, <strong>the</strong> net<br />
effect of all <strong>the</strong> <strong>in</strong>dividual contributions can be large-scale<br />
190<br />
structures that seem unexpected given <strong>the</strong> uncoord<strong>in</strong>ated<br />
behaviour of <strong>the</strong> constituents.<br />
Explanations <strong>in</strong> terms of social mechanisms,<br />
advocated among o<strong>the</strong>rs by Elster, can be seen as a way<br />
to overcome <strong>the</strong> divide between methodological<br />
<strong>in</strong>dividualism <strong>and</strong> holism, its classical opponent, s<strong>in</strong>ce <strong>the</strong>y<br />
enable explanations <strong>in</strong> <strong>the</strong> middle between microsociological<br />
<strong>and</strong> macro-sociological research, which is<br />
often desirable for explanatory purposes. They “provide<br />
more f<strong>in</strong>e-gra<strong>in</strong>ed accounts of social processes than do<br />
macro structural <strong>the</strong>ories, but <strong>the</strong>y do not require a<br />
commitment to <strong>the</strong> strictures of methodological<br />
<strong>in</strong>dividualism” (Pickel 2004: 177). In particular, model<strong>in</strong>g<br />
with artificial societies comb<strong>in</strong>es methodological<br />
<strong>in</strong>dividualism on <strong>the</strong> one side <strong>and</strong> <strong>the</strong> search for<br />
mechanistic explanations on <strong>the</strong> o<strong>the</strong>r side. The<br />
correspond<strong>in</strong>g formal manifestation is a “shift from<br />
equation-based model<strong>in</strong>g to agent-based model<strong>in</strong>g”<br />
(Sawyer 2004: 263).<br />
In <strong>the</strong> follow<strong>in</strong>g I want to reflect upon one particular<br />
str<strong>and</strong> of agent-based model<strong>in</strong>g. In <strong>the</strong> last decade<br />
economists <strong>and</strong> physicists <strong>in</strong>vestigated various so-called<br />
microscopic models of f<strong>in</strong>ancial markets, for <strong>in</strong>stance <strong>the</strong><br />
Kim-Markowitz, <strong>the</strong> Levy-Levy-Solomon, <strong>the</strong> Cont-<br />
Bouchaud, <strong>the</strong> Solomon-Weisbuch, <strong>the</strong> Lux-Marchesi, <strong>the</strong><br />
Donangelo-Sneppen <strong>and</strong> <strong>the</strong> Solomon-Levy-Huang model<br />
(see Samanidou et al. 2007 for a review). In <strong>the</strong> stochastic<br />
multi-agent model of Lux <strong>and</strong> Marchesi (1999), for<br />
<strong>in</strong>stance, <strong>the</strong>re are two types of traders, ‘fundamentalists’<br />
<strong>and</strong> ‘noise traders’ (or ‘chartists’). Fundamentalists are<br />
rational traders <strong>in</strong> <strong>the</strong> sense that <strong>the</strong>ir action is based on<br />
<strong>the</strong> comparison of <strong>the</strong> fundamental value of <strong>the</strong> traded<br />
asset (e.g. stocks, bonds or currencies) <strong>and</strong> <strong>the</strong> actual<br />
market price. Fundamentalists buy if <strong>the</strong> asset is<br />
undervalued, <strong>and</strong> <strong>the</strong>y sell if it is overvalued. In <strong>the</strong> case of<br />
noise traders <strong>the</strong> behaviour only depends on <strong>the</strong> current<br />
price trend <strong>and</strong> <strong>the</strong> op<strong>in</strong>ion of o<strong>the</strong>r traders. In <strong>the</strong><br />
follow<strong>in</strong>g I will use this approach as an exemplary agentbased<br />
model.<br />
2. False Models as a Path towards Real<br />
Mechanisms<br />
In non-law-based accounts of explanation, such as Woodward's<br />
(2003) causal approach, models often play a crucial<br />
role <strong>in</strong> discover<strong>in</strong>g causal relations (also see Glennan<br />
2002). I want to claim that <strong>in</strong> agent-based explanations,<br />
<strong>the</strong> identification <strong>and</strong> underst<strong>and</strong><strong>in</strong>g of causal mechanisms<br />
is <strong>in</strong> fact <strong>the</strong> ma<strong>in</strong> function of modell<strong>in</strong>g. Mechanisms are<br />
not simply very detailed descriptions of what is happen<strong>in</strong>g,<br />
but <strong>the</strong>ir identification is crucial for causal explanations of<br />
why th<strong>in</strong>gs behave <strong>the</strong> way we observe <strong>the</strong>m. The specification<br />
of mechanisms is explanatory because it abstracts<br />
from as many details as possible with respect to <strong>the</strong> explanatory<br />
target. Thus simplicity is a crucial characteristic<br />
of mechanisms <strong>and</strong> <strong>the</strong> best way to identify mechanisms <strong>in</strong><br />
complex systems is by construct<strong>in</strong>g simple idealized models.<br />
It is not essential that <strong>the</strong> mechanism is completely<br />
realistic. Gibbard <strong>and</strong> Varian 1978 po<strong>in</strong>t out that even<br />
‘caricature models’ can help to underst<strong>and</strong> certa<strong>in</strong> aspects