Development and Underdevelopment in the History of Economic Thought

On Keynes’s Treatise on Probability enduring message

Zappia Carlo, Siena

On the occasion of the assessment of the enduring influence of Keynes’s Treatise on Probability at 100 years, the paper places emphasis on Keynes’s introduction of the epistemic notion of probabilities that often are non-numerical, as a theoretical object intended to replace frequency probabilities. The paper argues that, as non-numerical probabilities make it possible to deal with uncertainty as if individuals were endowed with either interval-valued or non-additive probabilities, Keynes's 1921 critique of contemporary frequency probability theory turns out to be relevant also with regard to the yet to be established subjective probability theory. Since non-numerical probabilities were used by Keynes to criticize the contemporary application of probability to conduct, it must be acknowledged that, still today, they may constitute an appropriate tool for decision-making when confronting uncertainty, as he hinted at in his late 1930s correspondence with Hugh Townshend.

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Keywords: probability, uncertainty, Keynes