Using Models

Using Models Chapter 2-3

What is a model •  Simplified representations of reality play a crucial role in economics.

Models in Economics • A model is a simplified representation of a real situation that is used to better understand real-life situations. • Create a real but simplified economy • Simulate an economy on a computer

Ceteris Paribus • Economist make many assumptions as they create these models. • The “other things equal” assumption means that all other relevant factors remain unchanged.

Using Models • Positive economics is the branch of economic analysis that describes the way the economy actually works. • Normative economics makes prescriptions about the way the economy should work. • A forecast is a simple prediction of the future.

Positive vs.. Normative • Facts and forecasts • Usually debate is based on accuracy of data • The question of how it should be • Usually debate is based on perspective of fairness

Using Models • Economists can determine correct answers for positive questions, but typically not for normative questions, which involve value judgments. • The exceptions are when policies designed to achieve a certain prescription can be clearly ranked in terms of efficiency. • It is important to understand that economists don’t use complex models to show “how clever they are,” but rather because they are “not clever enough” to analyze the real world as it is.

When and Why Economists Disagree • There are two main reasons economists disagree: • They may disagree about which simplifications to make in a model. • They may disagree about values.

Simplifying Assumptions making life complicated • Since economist rely heavily on modeling • Which are simplified representations of reality • Economist argue about which simplifications are appropriate.

Simplifying assumptions • Since they use different models with different assumptions they end up with different conclusions.

Values can differ • Different people (economist are people too) bring their values with them to any analysis • Tax example in the book

Finally • Economics is a method • NOT a set of conclusions!

Using Models

Using Models

Presentation Transcript

Abduction Using Neural Models

2.4 Using Linear Models

Image Segmentation Using Physical Models

SP1. Using Representations and Models

Analysis: Using Argumentative Models

Using Models of Reasoning

Using Models in Science

Mining Declarative Models using Intervals

Using the models, prediction, deciding

Comparing demographic models using ABC

Abduction Using Neural Models

2.4 Using Linear Models

Forecasting using ARIMA-models

Multiplying Fractions Using Models

2-5 Using linear models

Forecasting using simple models

Occlusion Tracking Using Logic Models

2.5 Using Linear Models

Using Linear Models

Scalable Models Using Model Transformation

Using Models in Urban Planning

OO Using UML: Dynamic Models