TITLE:
Economic Science and Entropy
AUTHORS:
George M. Lady
KEYWORDS:
Entropy, Qualitative Analysis, Model Falsification
JOURNAL NAME:
Theoretical Economics Letters,
Vol.10 No.6,
December
8,
2020
ABSTRACT: Economic theory often does not fully specify the
quantitative details of proposed models of economic activity. Instead, only the
“direction of influence” of the associated variables is proposed. Such
specifications are expressed by the sign patterns of the Jacobian array of the
mathematical system specified by the theory. This paper shows that such arrays
often only specify the frequency distributions of the sign patterns of arrays
that might be estimated from the corresponding data. Shannon’s concept of
entropy from information theory can then be used to measure the information
provided by the theory.