Karl Popper -- The Logic of Scientific Discovery

The Logic of Scientific discovery:

3 conditions:

1. the Starting conditions
2. the Reversible Hypothesis
3. the Ending conditions

3 applications:

i. the explanation

ii. the prediction

iii. the back testing

If you are given (a) and (c), you try to do (i) using (b).

If you are given (a) and (b), you try to do (ii) to find (c).

All these based on (b) being a reversible hypothesis and that the hypothesis itself does not affect the outcome of (c).

It is easier to apply in natural sciences. Examples, clean room, controlled experiments.

The usage in social sciences, especially in Economics and Finance, is doomed with complications and abuses.

Example, the Hypothesis of Singapore having 6.5 million in population and ending with prediction of huge demands in highly priced condominiums is to me a “tainted experiment”.