The Role of Ignorance about Keynes’s Inexact, Approximation Approach to Measurement in the A Treatise on Probability in the Keynes-Tinbergen Exchanges of 1938-1940 in the Economic Journal

Abstract

J.Tinbergen and J. M. Keynes held diametrically opposed positions on measurement. Tinbergen’s physics background led him to deploy an exact approach to measurement based on the specification of probability distributions, like the normal and log normal, with exact and precisely probabilities that were linear, additive and definite. All probabilities for Tinbergen were assumed to be well defined, precise, exact, determinate, definite, additive, linear, independent single number answers, whether the field was physics or economics. Keynes’s approach was an inexact one. Probabilities for Keynes were, with a few exceptions, partially defined, imprecise, inexact, indefinite, indeterminate ,non additive, non linear, and dependent. Probability estimates for Keynes required two numbers to specify the probability within a lower and upper bound (limit), and not one single number like Tinbergen’s approach. Keynes called this approach Approximation. Keynesian probabilities are interval valued.

The problem, from Keynes’s perspective, was that Tinbergen was trying to apply to economic data techniques which were only sound when applied in physics ,where laboratory controlled environments with detailed experimental design could generate data and replicate/duplicate the experiments. Keynes had always argued that economics was not a physical or life science like physics, engineering, biology or chemistry and that it could never be like physics.