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Cool Harford essay about value of economic models

September 12, 2010
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One of my other great interests (despite never having formally studied the subject) is economics. Marginal Revolution is almost required internet reading, and the planet money podcast is one of my top 4 or 5 podcasts (of course, nothing is better than Radiolab). Anyway, thanks to MR, I came across this great essay about economic models, which mentioned models in physics, and makes me wonder how I can use this in my classes.

Models tell us more than hindsight

One interesting quote:

He argues that while economic edifices are always collapsing, “buildings constructed according to the laws of physics seem to stand”. This is an odd statement. Buildings constructed according to the laws of physics have a habit of falling down. Henry Petroski, engineer and author of Success through Failure, observes that structural engineers tend to learn by constructing ever more ambitious structures. When one of them falls down or wobbles, engineers figure out what was wrong with their models. Sometimes the results are tragic: when the innovative Malpasset dam cracked thanks to inadequate geological modelling, nearly 400 people died. Sometimes they are delicious: the award-winning Kemper Arena collapsed, with no loss of life, just 24 hours after hosting the American Institute of Architects Convention. From his riverside eyrie, I think Gideon can just see the famous wobbly bridge across the Thames. Is this really a damning indictment of the laws of physics?

But, of course, our grasp of the laws of physics is not to blame. The trouble is the difficulty of modelling them in a world with snowdrifts, clay seams and error-prone contractors. In short, buildings, like economic institutions, stand up not because of our grasp of the laws governing them, but because they have survived a process of trial and error in a complex world.

Right now my kids really have trouble with the meaning of the word “model.” This is partly because before now, all science has been is labs and equations. Labs are things you do, and equations are things you plug into. Neither is really connected to the real world, and they don’t see equations as part of a model we can use to describe the world. Somehow I doubt getting them to read this essay would really help (they don’t really have a dog in the economists vs historians fight), but some of the examples here might helpful to bring up from time to time. After all, they figured out that question about 18th century British incentives to ship criminals to Austrailia way faster than those college kids.

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