Tuesday, October 10, 2023

Economic models as metaphors - Limiting our ability to explain


Models are metaphors which follow specific rules and with rigorous standards. We may not notice them as metaphors because of the formalism that surrounds the model. The model with math is often used as the narrative of economics. The actual story, as told in words, is downgraded versus the approach of providing assumptions and a set of equations that are maximized and then tested with econometric techniques. The p-values and sizes of coefficients serve to tell the story. The values are the story. Economic models, through the use of math, serve as a science, yet we are limited by our model metaphor stories. The model narrative is limited by the valuables employed and the tests conceived. 

The value with the model is that narrative can be told in shorthand and in a language that can be understood around the globe. This is a tremendous benefit and allows for everyone to potential understand the meaning of the story in the same way. There is no confusion once we stay within the bounds of there model, yet are imagination is limited by the constraints of the model and we may allow the model to be the end and not serve as a tool for explaining the phenomena we are trying to describe.

"It is wrong to think that the task of physics is to find out how nature is. Physics concerns what we can say about nature." - Ruth Moore Niels Bohr

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