This essay considers the practical and relatively superficial generalizations that economists use in explaining and predicting phenomena and in offering policy advice. Examples are the law of demand or the claim that increasing the money supply increases the rate of inflation. Such generalizations are not universal laws. Generalizations such as the “law” of demand, or generalizations relating changes in the money supply to changes in the rate of inflation are causal claims. This paper will focus on the use of generalizations in causal reasoning both in the context of explanation and in the context of predicting the consequences of policies.
