This blog recently republished an article by Frank Shostak asking “Is there a place for experimental economics?” I could write a lengthy defense of not only why experimental economics has a useful role within economics, but also the ways in which it is methodologically compatible with Austrian economics.
Fortunately, I don’t need to. In “Why Austrians should quit worrying and learn to love the lab” Ben Powell and Ryan Oprea do precisely this [working version here]. And one of the authors they directly respond to is Shostak himself (and indeed an article he wrote back in 2002, which appears to be the basis for his recent article here).
Their argument is a Misesian one – the distinction between theory and history:
an Austrian economist need not interpret any experimental result as “testing” praxeological theory. Experimental economics investigates concrete cases of human action much like economic history does. Austrian economics does not reject historical, ethnographic, or econometric findings per se. It rejects their capacity to test praxeological theory. So should be the case with experimental economics. Even if one holds that propositions in economic theory are beyond testing, experimental results can at least illustrate them
It is also worth reading, and understanding Smith’s Nobel lecture [.pdf], where he makes a distinction between ecological and constructivist rationality. If Austrians can’t learn from the likes of Vernon Smith – and those Austrian economists who’ve worked alongside him to expand our understanding of human action – we might as well shut ourselves off from all contemporary economics. Experimental economics is a fertile, fervent research programme that all schools of thought can learn a great deal from. It is a complement to Austrian economics, not a substitute.