Merton Miller championed Friedman’s disregard of model assumptions while Modigliani preferred realism

Evidence

Miller, in contrast, was prepared more radically to set aside the question of the validity of assumptions, in the manner advocated by Friedman (Miller interview). Modigliani and Miller’s published joint work trod a middle path they explored the consequences of the simple assumptions of a “perfect market,” but also attended carefully to the effects of relaxing those assumptions but private disagreement between them emerged over the range of conditions under which their propositions would hold, in particular in respect to the tricky question of the effects of corporate and personal taxes (Miller interview; Modigliani interview). — Donald MacKenzie, An Engine, Not a Camera, 188

Categorization

• XREF: The Friedman tension — assumptions need not be realistic — maps onto the broader financialization literature’s debate over whether models are descriptive or merely instrumental. — connects to: Friedman armed finance theorists against ‘unrealistic’ critiques of their models. — Donald MacKenzie, An Engine, Not a Camera: How Financial…, 62

Broader Connections

• Friedman armed finance theorists against ‘unrealistic’ critiques of their models. #corroborates (0.90) — Donald MacKenzie, An Engine, Not a Camera, 62