A Cautionary Tale of Index Numbers: from Haberler and Neurath to the 21st Century
Sprache des Vortragstitels:
Englisch
Original Tagungtitel:
27th Annual Conference of the European Society for the History of Economic Thought
Sprache des Tagungstitel:
Englisch
Original Kurzfassung:
Index numbers mesmerize the public, in times of galloping inflation even more so. They are thought to have the capacity to condense complex phenomena to a single numeral in a scientifically objective manner and to order seemingly incommensurable phenomena, as well as to justify policies. Recent criticisms have spotlighted misuses and pitfalls of quantification in general (Newfield et al 2023), and of the underestimated role of value judgements in the creation, calculation, and application of price indices in particular (Reiss 2008, 2022).
In the cautionary spirit of Viennese Late Enlightenment, Austrian economists Gottfried Haberler (1927) and logical empiricist Otto Neurath (1910, 1911, 1937, 1939) critically discussed the limitations of index numbers right from the start. Their own constructive contributions impress by their highly modern pluralism and contextualism: a meaningful assessment of ?the standard of living? or of ?the price level? is dependent on the context and purpose of the inquiry. According to Haberler, a single price index can never satisfy all our epistemic needs. Neurath is even more skeptical and thinks that meaning- and useful index numbers cannot be defined for many contexts of interest. Both Haberler and Neurath reject talk of ?the one true price level? as an entity which is supposedly independent of any well-defined index.
This paper analyzes to what extent Haberler and Neurath anticipated contemporary criticisms of index numbers and how they are used in practice. Furthermore, while acknowledging and differentiating various ways in which value judgements enter deliberations involving index numbers, we examine whether a fact-value dichotomy in line with Haberler?s and Neurath?s positions is defensible in light of strong contemporary claims of fact-value entanglement.
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