The Relation Between Prediction and Prescription in Economics

Abstract

When economics moves from “description” to “prescription,” the research shifts from basic science to applied science. Chapter 13 emphasizes the interdependence between prediction and prescription in economics, which is connected with the “descriptive” and “normative” realms. The interest moves from prediction as a test to a guide for policy-making, which involves the use of prediction for public policy as well as quantitative and qualitative considerations. In this sphere of economics, the insufficiency of prediction is clear, as is the need for prescription. Thus, it may be a move from predictivist instrumentalism to the possible primacy of prescription. In any case, economic prescription needs values. The axiological content of prescription is relevant and involves internal and external values of prescriptions. It seems clear that the relation between prediction and prescription in economics is a central tenet for future developments.