J. M. Keynes (Inexact Measurement, Approximation) on Probability in 1939-1940 versus J. Tinbergen (Exact Measurement): There was no Middle Ground between them

(Pages: 37-44)

Michael Emmett Brady*

California State University, Dominguez Hills, College of Business Administration and Public Policy, Department of Operations Management, 1000 Victoria St, Carson, California 90747


Tinbergen wanted to approach economics as if it were physics. Unfortunately, it is not the case that an argument of analogy holds between a particle in physics and an individual in economics. For Keynes, exact, precise ,linear, additive ,definite, determinate probabilities are not available, in general, to provide an economic analysis except in the area of consumption and inventories. This was pointed out in great detail by Adam Smith in 1776 ,who also argued that probability could never be precise and exact ,but only inexact and imprecise(Smith ,1776,pp.105113,714).However, an economic analysis can involve inexact, imprecise, indeterminate, nonlinear, non additive, indefinite quantitative analysis.
Keynes and Tinbergen came from different intellectual backgrounds. Keynes’s method is built on Boole’s approach using lower and upper probabilities. This approach runs throughout the ’A Treatise on Probability’ (TP, 1921). Tinbergen was using the precision of physics as his model for economic analysis. 


Exact measurement, Inexact measurement, Additivity, Non-additivity, Precise probability, Imprecise probability.