Understanding with models

The puzzle of model-based explanation and understanding

Theoretical modelling raises many epistemological challenges. Models appear to explain economic phenomena, yet they also seem to lack crucial features theories of scientific explanation usually require, for instance faithfully representing causal factors of interest. For instance, can economic models explain the world if they rely on assumptions that we know are descriptively false of the world we live in? Do shocks in technology or productivity explain business cycles if there are no such shocks? Would the greed of bankers explain why the Great Recession occurred if bankers had not actually been greedy? Is unemployment a voluntary decision if in fact people preferred to work?

This creates a puzzle, Verreault-Julien says, because our best philosophical theories tell us that these models do not explain real-world phenomena since they misrepresent causal factors. Yet, practitioners consider that theoretical modelling increases our understanding of the world. This suggests the following dilemma: shall we revise our philosophical theories, or shall we consider that the practitioners are mistaken?

A novel solution

The received view of the relationship between explanation and understanding is that one understands if and only if one has an explanation of that phenomena. One general implication of Verreault-Julien’s research is that understanding is an epistemic benefit that can be had in the absence of an actual explanation. As a result, he both argues that our philosophical theories need revision, but also that practitioners might mix-up understanding for explanation.