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The Sciences of Finance, Their Boundaries, Their Values

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Methods and Finance

Part of the book series: Studies in Applied Philosophy, Epistemology and Rational Ethics ((SAPERE,volume 34))

Abstract

Several approaches from the social and natural sciences take finance, and especially financial markets, as a domain of systematic inquiry. Historians of economic thought have discussed extensively the emergence and evolution of some major, competing paradigms within finance, focusing on differences in their methodological and theoretical assumptions, as well as on the ways in which they have achieved dominant positions in the academia. However, how do these paradigms see the problem of their own value, in relationship to the value of their field of study? In other words, how do they present finance as a set of phenomena worth studying, and what is valuable about studying them from a particular angle? I examine here in this respect five significant scientific approaches to finance: financial economics, market microstructure, behavioral finance, social studies of science, and econophysics. I show how they represent the study of financial markets as a valuable, systematic endeavor, and how they represent their own value in providing a distinctive approach to the study of finance. I distinguish between internalistic and externalistic claims to value among these approaches. Internalistic value claims make reference to data accuracy and to methodological adequacy, while externalistic claims make reference to investigating links between finance and other forms of social organization and institutions.

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Notes

  1. 1.

    Outside the sciences, we also encounter approaches claiming rigor and discipline. Technical analysis, for instance, enjoys relatively widespread usage among (professional and non-professional) traders, as well as some institutional structures, such as professional organizations and conferences. Technical analysis, however, is not regarded as a science and is not established as such within the academia. It does not claim a conceptual core—that is, a series of propositions and assumptions about human behavior and decision making, in the way the sciences of finance do.

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Authors and Affiliations

  1. King’s College London, London, UK

    Alex Preda

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  1. Alex Preda
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Editors and Affiliations

  1. Philosophy Department, Sapienza University of Rome,Dipartimento di Filosofia Via Carlo Fea 2, Rome, Italy

    Emiliano Ippoliti

  2. National School of Development, Peking University, Beijing, China

    Ping Chen

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Preda, A. (2017). The Sciences of Finance, Their Boundaries, Their Values. In: Ippoliti, E., Chen, P. (eds) Methods and Finance. Studies in Applied Philosophy, Epistemology and Rational Ethics, vol 34. Springer, Cham. https://doi.org/10.1007/978-3-319-49872-0_9

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