Many financial economists treat Modigliani-Miller as benchmarks rather than empirical claims

Evidence

The Modigliani-Miller propositions provide those pages with their central organizing themes, but the text’s authors treat the empirical validity of those propositions as still an open question. Indeed, my impression is that a significant strand of opinion in financial economics does not regard the propositions as empirical claims, viewing them more as “benchmarks” against which deviations can be analyzed.’ — Donald MacKenzie, An Engine, Not a Camera, 390

Categorization

• XREF: Connects to the broader philosophy-of-science question of when a ‘hypothesis’ functions as a benchmark — parallel to Kuhn’s paradigms or Milgrom’s institutions as reference points. — connects to: Early critics rejected Modigliani-Miller for lacking any empirical grounding — Donald MacKenzie, An Engine, Not a Camera: How Financial…, 195; Empirical failure does not dislodge orthodox economists from their theory — Philip Mirowski, Never Let a Serious Crisis Go to Waste, 722; Unrealistic assumptions do not count as legitimate criticisms in financial economics — Donald MacKenzie, An Engine, Not a Camera: How Financial…, 63 (+5 more)

Broader Connections

• Empirical failure does not dislodge orthodox economists from their theory #expands (0.80) — Philip Mirowski, Never Let a Serious Crisis Go to Waste, 722
• Unrealistic assumptions do not count as legitimate criticisms in financial economics #expands (0.80) — Donald MacKenzie, An Engine, Not a Camera, 63
• Mainstream economists admit failure to predict the crisis but resist overhauling the discipline #expands (0.80) — Philip Mirowski, Never Let a Serious Crisis Go to Waste, 517
• Mainstream economists defended theory by scapegoating Greenspan-style market fundamentalism #expands (0.80) — Philip Mirowski, Never Let a Serious Crisis Go to Waste, 700
• Economists defended failed prediction by asserting contradictory claims at once #expands (0.80) — Philip Mirowski, Never Let a Serious Crisis Go to Waste, 697
• Modigliani-Miller propositions resist empirical testing because risk classes cannot be fixed #qualifies (0.75) — Donald MacKenzie, An Engine, Not a Camera, 389