The Road to Rationalization : A History of 'Where the Empirical Lives' (or Has Lived) in Consumer Choice Theory

This paper examines the different ways that economists have characterized the empirical content of modern consumer choice theory. There has been general agreement among economists that each stage in the development of the theory – from early neoclassical, to ordinal utility, and on to revealed preference – has been associated with an improvement in the theory's empirical content (how the theoretical terms of the theory make contact with the empirical or observational), and yet, as the paper demonstrates, there has been almost no agreement about what exactly the empirical content of consumer choice theory is at any stage in the process. I call this the problem of observational ambiguity. The paper historically documents this observational ambiguity, links it to various theoretical developments, and relates it to debates in contemporary economic theory