The Oxford Handbook of Philosophy of Economics is a welcome and valuable addition to the already expanding list of handbooks and anthologies concerning philosophy of economics (henceforth, PoE). The Handbook is advertised as groundbreaking and it distinguishes itself from others (e.g. Caldwell Reference Caldwell1993; Davis et al. Reference Davis, Hands and Mäki1998; Hausman Reference Hausman2008; Gabbay et al. forthcoming) by explicitly distinguishing between ‘old’ and ‘new’ PoE, and by openly promoting the new PoE.

The Handbook describes the basic defining characteristics of the old PoE as follows. Firstly, it mainly focuses on the state of mainstream economics during 1970s and mostly ignores contemporary developments in economics. Secondly, the old PoE (mostly) follows the received view of philosophy of science in that it asks questions that stem from the assumptions concerning the centrality of theories, laws and evidence in science. The status of economics as a science, the role of laws in economics, progress in economics, the logical structure of models and explanations in economics, truth, falsifiability, verification, realism are some of the central themes of the old PoE. The editors argue that the old PoE was unfruitful in that it had almost nothing to say to practising economists. We may grant that the editors have a point here. The continuous lack of communication between economists and philosophers of economics suggests that there is something wrong in the way philosophers of economics have framed their questions and presented their ideas. For example, recent methodological debates concerning neuroeconomics and the explanatory power of macroeconomics show us that when economists discuss methodological and philosophical problems concerning their field, they rarely utilize the PoE literature. This cannot be explained solely by the ignorance of economists. Both sides should be held responsible and according to the Handbook, the old PoE is responsible because of its highly abstract philosophical approach and its failure to follow contemporary developments in economics.

The first part of the Handbook provides an overview of the old PoE. It contains articles from Daniel Hausman, Alex Rosenberg, Uskali Mäki and Philip Mirowski who are chosen as representative members of the old PoE. In his chapter, Hausman lists some similarities between Rosenberg's and his approach to economics. He argues that when they began to work on this topic in the 1970s they both considered ‘laws as fundamental to science’, ‘scientific testing as testing of lawlike statements’, causation as a matter of lawlike regularity, and ‘theories as sets of lawlike statements’ (p. 37). From this perspective, economics looked like ideological claptrap, rather than science. Yet, being unable to ignore the intellectual richness of economics, Hausman found it hard to condemn the discipline because of the difficulties concerning laws in economics. Nevertheless, Hausman explains, he did not challenge the received view, rather he ‘explored the possibility that the basic generalizations of economics might be regarded as in some sense approximate laws’ (p. 37). Hausman's partly autobiographical contribution justifies the Handbook's distinction between the old and new PoE. In fact, Hausman admits that his focus on laws in economics was misplaced and argues that the PoE ‘needs to be built around the concept of causation’ (p. 48).

Rosenberg's contribution is also partly based on a story of his intellectual development. His initial questions about economics concerned its status as a scientific endeavour. Certainly, economics looked like science, but was it a proper science? He thought that ‘for a discipline to be a science, [. . .] it had to show long-term net improvements in predictive power’ (p. 57). Yet, according to this criterion, economics did not seem to be a good science. Thus he asked ‘if economics is not a science, what is it?’ In his chapter, Rosenberg admits, this was not the right question to ask. He argues that his work on biology and evolutionary theory finally pointed him to the right question: ‘if economics is a science, what kind of a science is it?’ Today, Rosenberg's answer is that economics is a biological science. His arguments concerning the similarities between explanations in economics and evolutionary biology are interesting. The bottom line of his argument is that both biology and economics provide explanation sketches and are based on very few principles. This partly explains economists’ predictive failures, because models that are based on a few general principles can only provide some general predictions (prediction sketches?) concerning complex phenomena.

Uskali Mäki's partly autobiographical chapter is an excellent and effective summary of his research and contributions. Mäki's main thesis can be summarized quite briefly: false assumptions usually serve an important purpose and models may be explanatory despite their unrealistic assumptions. In making this claim Mäki is responding to the criticism of economics that plainly argues that mainstream economic models are not explanatory because of their unrealistic assumptions. It was Mäki's project to debunk this common view and invite everyone to engage in a philosophically educated methodological discussion. In contrast to many others, Mäki's project is a descriptive one and it avoids normative judgements concerning the success or failure of economic models. He mainly aims at providing the right philosophical toolbox and leaves the judgement to his readers. From some philosophers’ point of view – such as Hausman's – this may be an uninteresting project, but it is useful in providing a ground for a better PoE. In the chapter, Mäki lists and summarizes his contributions and provides a good starting point for those who are interested in his work.

Mirowski's contribution to the Handbook differs from other representatives of the old PoE. He neither reflects on nor summarizes his own work. Rather, he provides us with another grand narrative, this time about the so-called economics of knowledge. Mirowski's focus is on the widely held view that the role of knowledge and information has become very important in modern economics. He asks whether economists have a theory of knowledge or information which may support the argument that markets or the agents in markets are processors of information. Could neoclassical economics provide us with an ‘adequate account of the process by which knowledge is gained, interpreted, and understood?’ (p. 100). Mirowski ridicules the characterization of the introduction of information and knowledge into economic theory as a breakthrough and argues that even if there was such a breakthrough economists are unable to explain how they arrived at it. What we have, Mirowski contends, is only just-so stories. Mirowski attempts to explain why the economics of knowledge is nonexistent and how economists have become proud of this nonexistent achievement. As usual, his contribution is an excellent read even if you disagree with him. Nevertheless, it is not exactly clear why he is classified as old school (except perhaps for chronological reasons). Neither his research nor his contribution to the Handbook fit comfortably into the Handbook's definition of the old PoE. Mirowski does not hold many of the presuppositions of the old school and he has not ignored contemporary developments in economics – on the contrary, he has a great interest in scrutinizing and criticizing the contributions of contemporary economists. In fact, his chapter demonstrates how different he was from the other members of the old school and how close he is to some of the members of the new school such as John Davis and Don Ross in terms of his taste for grand narratives, rather than abstract philosophical analysis (more on this later).

All in all, the first part of the book is very successful because it gives a real sense of what the founders of PoE were up to and what they are interested in recently. Of course, the Handbook would have benefited from a review article that overviews the contributions of other influential philosophers of economics of the first generation, but absence of such a review is not a big problem. The only problem may be that after reading the editors’ introduction to the Handbook and their depiction of the old PoE, the reader – especially newcomers to PoE – may decide that since the old PoE is unfruitful it should be avoided. This would be a mistake. In fact, all four pieces in the Handbook are wonderful readings for students of PoE. Hausman's piece is particularly useful because he openly discusses where he was wrong and admits that not questioning the received view in philosophy of science was a mistake. Moreover, his emphasis on the importance of causation is well placed. Although Rosenberg and Mäki are more hesitant to confess their flaws, their contributions are also useful for students of PoE. Rosenberg's current views on economics as a biological science provide students with a brilliant starting point for asking new questions concerning economics. Mäki, on the other hand, provides an important set of tools and concepts for the newcomers to the field. And Mirowski: there is always a lot to learn from him – even if you are a senior philosopher of economics. More generally, the old PoE (not only its representatives in this book, but in general) teaches us a lot about how to approach, scrutinize and present one's philosophical thinking concerning economics. Nevertheless, the Handbook promotes the new PoE and – as we shall see – it has good reasons to do so.

The representatives of the new PoE are more concerned with economists’ day-to-day methodological concerns. The Handbook demonstrates that they work on a wide variety of topics concerning recent developments in economics. However, as opposed to the old PoE, the new PoE neither has a unified set of tools, nor subscribes to a common philosophical world view. This is no surprise, since the representatives of the new PoE are searching for new and better ways of philosophizing about economics.

The Handbook represents the new PoE with 17 high quality articles which have the combined effect of making one wonder what the new PoE really is. At times it is difficult to distinguish the new PoE from economics itself. However, the editors make it clear at the outset that this is not a bug of the Handbook, but a feature:

The editors argue (or hope) that the new PoE will be more fruitful in the sense of contributing directly to the development of economic science.

The second, third and fourth parts of the Handbook contain contributions from the new PoE. The second part contains articles concerning microeconomics – particularly social preferences and norms, conceptions of the individual, economic agency, experimental economics, mechanism design and evolutionary explanations. The third part tackles issues concerning computational economics, microfoundations, invariance, data mining, economic growth and labour market models. The fourth part mainly discusses issues concerning welfare economics: measurement of welfare and well-being, interpersonal comparisons of utility, and the role of values in economics get special attention. Contributors include both philosophers and economists, and the Handbook reflects a wide variety of topics and approaches both in economics and philosophy of science. Since it is impossible to discuss all the articles in the handbook here, in what follows, the focus will be on the part I am relatively more competent about: the part on microeconomic matters.

The Handbook's selection of the new PoE on microeconomic matters consists of contributions concerning rationality and social preferences (by Cristina Bicchieri and Jim Woodward), economic agency and the place of individual in economic theory (John Davis and Don Ross), experiments and mechanism design (Francesco Guala, and Anna Alexandrova and Robert Northcott) and evolutionary explanations in economics (Jack Vromen). Bicchieri presents a clear account of norms and suggests a way to include them in utility functions so that better explanations for anomalous experimental results could be provided. Woodward evaluates accounts of social preferences that differ from Bicchieri's norm-based approach. Both Bicchieri's and Woodward's contributions are useful to get a better understanding of the relevant literature and they could also be considered as relating to economics in ways that the old school did not. Both articles demonstrate that the PoE could be made more relevant for practising economists. Especially, Bicchieri's discussion of rationality and indeterminacy has practical consequences for economic modelling, because she suggests that the introduction of a social component in utility functions will improve the explanatory power of rational choice models.

Bicchieri's and Woodward's articles are followed by Davis's and Ross's attempts to make sense of the conceptions of individual and economic agency in economics. Both are thoughtful and informative articles. However, it is not clear whether they relate to economic research in fruitful ways. I am doubtful for example that economists would be interested in reading Davis's excellent review and analysis of the different conceptions of the individual in economics. And I should confess that as a philosopher of economics I also do not know what to do with it, other than appreciating the intellectual and philosophical depth of the article. Don Ross's contribution is concerned with individuals and their interaction, but also with the interaction of different mechanisms from the neural level to the macro-social level. The reader is dazzled by the variety of topics he introduces – ranging from genetic evolution to neuroscience and from microeconomics to macrodynamics. Ross's impressive article is right on track in pointing out the complicated relationships among people, subpersonal interests and brain systems. However, one wonders whether the chapter could have been simpler and not reflect all the complexity of the subject. I suspect both philosophers of economics and economists would have benefited much more from it if Ross had not aimed at presenting us with all the associations and relationships between different levels of analysis and different approaches in economics. Finally, I am not sure how different these chapters are in comparison to the old school. Davis's and Ross's taste for grand stories is very similar to that of Mirowski. If the editors (Ross being one of them) are right in classifying Mirowski as old school, it is not clear why Davis and Ross are considered as members of the new school.

The next two articles are from the new generation of philosophers of economics and therefore may reflect what the PoE will look like in the future. Both Guala, and Alexandrova and Northcott have a more focused approach in comparison with Davis and Ross. Guala analyses experimental economics and presents and promotes a normative instrumental approach for prospective philosophers who wish to examine the field. His approach is both descriptive and normative. He describes the practices and actual methodology of experimental economists, and asks whether they are successful according to criteria that emerge from his analysis. This is definitely the type of PoE that the Handbook wishes to promote. It is clear and has consequences for both experimental economists (informs them about the dangers of their approach) and philosophers of economics (suggests a better way to do PoE). Alexandrova and Northcott have a similar approach. They examine the case of spectrum auctions, and suggest that a better understanding requires delving into ‘the dirty details of how theory is actually applied’ to auction design (p. 307). They also aim at developing a new account of models (called models as open formulas) that is able to explain how models are used in auction design. The problem is that they really do not go into the dirty details. At least they do not illustrate how exactly economic theory relates to design in spectrum auctions. Although their account of models is interesting, it is hard to see how it explains the use of models in auction design.

Finally, Jack Vromen discusses Nikolaas Tinbergen's four-question classification for explanations in biology in relation to evolutionary explanations in economics. He characterizes Tinbergen's classification based on questions concerning causation, development, function and evolution as a refinement of Mayr's distinction between proximate and ultimate causes of behaviour. He demonstrates both the merits and limits of this classificatory scheme. Particularly, he shows that Tinbergen's classification may help us remove some of the misunderstandings concerning explanations in bioeconomics, evolutionary game theory and neuroeconomics in spite of the fact that it has limited use in clarifying explanations of cultural evolution. More generally, by way of discussing Tinbergen's four questions, Vromen provides a framework for improving our thinking concerning evolutionary explanations. I should also note here that his contribution to the Handbook is one of the clearest among the members of the new school and it surely is a must-read for philosophers who are working on evolutionary explanations in economics.

The new school's part of the Handbook is full of articles that may be placed at the frontiers of economic and philosophical research. The following list of subjects and authors should give the reader a good idea about the richness of the Handbook: computational economics (Paul Humphreys), microfoundations and ontology of macroeconomics (Kevin Hover), causality and invariance (Nancy Cartwright), economic growth (Harold Kincaid), welfare (Keith Dowding), interpersonal comparisons of utility (Ken Binmore) and subjective measures of well-being (Erik Anger). The Handbook also contains contributions from economists that alert us to many methodological details that philosophers of economics may overlook. The following are very helpful in this respect: Stan du Plessis on data mining, Partha Dasgupta on facts and values in economics and Gary Fields on segmented labour markets in developing countries. Of course, not all of the contributions are as fruitful as promised by the editors. Yet, this is not a problem for the philosopher of economics who is driven by pure curiosity in philosophical questions concerning economics. It is a pleasure to read the Handbook even if not all the contributions fulfil the ambitious standards set by the editors.

The only problem with the Handbook may be that, after reading it, it is not exactly clear what the PoE is anymore – as promised by the editors. In fact, the Handbook is mind boggling. One is exposed to issues and debates concerning a wide variety of topics in economics without a clear vision of the questions philosophers of economics ask, and the tools and approaches they use. PoE, after all, looks like a field where intelligent and philosophically informed scholars ask really difficult questions and try to answer them without a unified set of tools. This may sound like a critical remark. However, when one looks at the recent literature, this seems to be what PoE really is. If you enjoy the diversity of methodologies and topics in PoE as I do, you will not conceive this as a problem. However, if you are hoping to find a unified and well-defined approach in the Handbook, you will be disappointed.

Overall, the Handbook is successful in showing us what recent philosophers of economics do and what recent PoE is, despite the fact that ‘what they do’ and ‘what it is’ is not as straightforward as it once was. Certainly, The Oxford Handbook of Philosophy of Economics will become one of the standard references for philosophers of economics. It will also become an essential part of PoE teaching.