1. Education
Jodi Beggs

Being an Economist Can Be Exhausting Sometimes...

By October 29, 2012

Follow me on:

One aspect of being an economist is thinking like an economist (shocking, right), which entails thoroughly weighing the costs and benefits of any decision. While this may seem like a good idea on the surface, it soon becomes clear that such rigorous analysis can get out of hand pretty quickly, and it can make a simple task such as grocery shopping quite a bear...and that's without even considering the all-important cash back decision at the checkout register.

Comments

October 30, 2012 at 3:44 am
(1) David Chester (Macreocompassion) says:

No doubt, that many poorly organized economists make the wrong choices because they have insufficient or unsuitable materials and data available. But it doesn’t have to be so. This problem becomes worse when one examines the many different schools of thought in macroeconomics, so it is hardly surprising that this subject leads to so much confusion.

The problem of getting a good solution begins with the various assumptions that they appear to be forced to make. The biggest one of these is that except for a choice few variables, all the others can be taken as not changing. Then the model which is used to base the decision, is incomplete and there is no doubt that the decision will be different to what would arrise had a different model been used.

Why can’t they all use a common model? which, as Einstein postulated is as simple as possible without being too simple. The model that I have in mind and which has already been presented on this site is my DiagFuncMacroSyst.pdf one which is also in Wikipedia Commons under Macroeconomics and (less clearly) also in Google Images.

This is the only representation I have seen which invcludes the 3 factors of production and their 3 returns. Considering that this theory (of Adam Smith) was first presented in 1767, it is very strange that today we are in such a bad state of modelling the social system! In my model there are 19 different mutual flows of money and goods flowing between 6 entities.

I would be interested in comments about the limitations of this model to properly represent the local country’s macroeconomy and, (there being none), wish that it was more generally adopted.

Leave a Comment


Line and paragraph breaks are automatic. Some HTML allowed: <a href="" title="">, <b>, <i>, <strike>

©2014 About.com. All rights reserved.