David Hume and Modern Economics

Abstract

Hume’s contribution to modern economics is normally thought of in terms of his early statement of the quantity theory of money, and to a lesser extent his views on trade and development. At a methodological level the influence from his empiricism is commonly traced to the development of econometrics. But if we explore his philosophy more fully, we find a much richer set of ideas which can illuminate the way we approach issues in modern economics. Here therefore we explore Hume’s theory of human nature and his theory of knowledge in order to understand how he viewed economic behaviour as inherently bound up in other aspects of life. From this follows a perspective on the relations between economics and other disciplines (notably history, sociology and psychology) which may inform current explorations of these relations. This reading of Hume’s approach to economics is illustrated by revisiting his theories of money and growth, and his approach to empiricism. Hume holds the potential for a much richer contribution to modern economics than is normally understood.