explanation : The New Palgrave Dictionary of Economics

Explaining socio-economic phenomena is one important aim of economics. There is very little agreement, however, on what precisely constitutes an adequate economic explanation. Starting from the very influential but defective ‘deductive-nomological model’ of explanation, this article describes and criticizes the major contemporary competitors for such an account (the probabilistic–causal, the mechanistic–causal and the unificationist models) and argues that none of them can by itself capture all aspects of a good explanation. When seeking to explain a socio-economic phenomenon it should therefore be borne in mind that different types of explanation serve different purposes.