I was presented this article as an empirical refutation of downards sloping demand:
I have skimmed over it and have not found anything too interesting. It discusses the Weak Axiom of Revealed Preference from neoclassical economics, so I am not sure that it is something that Austrian economics follows as well.
Thoughts?
I’ll focus on the first experiment presented in the paper, as it’s simpler.
The point of the first experiment was apparently to test homogeneity of demand. Two of the 10 situations, namely 1 and 7, were identical in the sense of relative prices and budgets. However, in absolute terms, the prices and budget of situation 7 were both 15% higher than those of situation 1. Apparently the remaining eight situations were there to make this relative identity non-obvious.
Homogeneity of demand, as implied by the Weak Axiom of Revealed Preference, means that utility-maximizing individuals would make the exact same decisions in situations 1 and 7. That is, the axiom implies that prices and budgets be dealt with only in relative terms, not absolute ones. However, 11 out of 12 subjects violated this axiom.
From an Austrian-economics perspective, I don’t see an issue here. The 11 “inconsistent” subjects were still acting rationally in the Misesian sense. Nothing in Austrian economics requires people to notice that relative prices/budgets are identical between one situation and another. All it requires is that people act according to what they do notice. Apparently people don’t always take notice when two situations have identical price-to-budget ratios. That has interesting implications for thymology, but not for praxeology.
Finally, I don’t see how Austrian economics requires demand curves to always be downward-sloping. In fact, doesn’t Austrian economics consider such things as demand and supply curves to be imaginary constructions - at least in part?
Imaginary in the sense of applying actual numbers to your value scales/preferences, probably, but not useless in a way of understanding.
I was referring to “imaginary construction” the same way that Mises does in Human Action, e.g. with “the imaginary construction of the evenly rotating economy”. Such imaginary constructions are certainly useful in a way of understanding.
I havent read it. But I cant imagine what is supposed to be “empirical evidence” against the fact that people want the same good, as cheaply as possible.