An Assessment of the Economic Way of Thinking Essay Example
In order to properly examine the economic robber, it is crucial to clarify the issue and proceed with constructing a model. Economists typically incorporate only essential variables when explaining the variable being studied, making sure that no significant factors are omitted. This approach, also referred to as Scam's (or Chasm's) razor, is also utilized by other disciplines.
According to Hal Varian, an influential economist, the process of constructing a model involves starting with a basic version and observing if it exhibits interesting behavior. If it does, the model should be further simplified as its purpose is to offer a simplified representation of reality. The aim is to capture the essence of the situation, as Einstein once stated that everything should be as simple as possible but not overly so. However, crucial factors should not be excluded when simplifying the model. Varian explains that economic
...models typically have a similar structure where economic agents make choices to achieve their goals while adhering to various constraints for consistent decision-making. Once all relevant variables are incorporated into the model to explain the economic problem, it needs to be tested using available data in order to determine its value for future application.
If the data validates the suggested relationship in the model, it can be utilized to forecast the behavior of the variable being studied in response to changes in established influencing variables. However, economists encounter disagreements on non-testable matters and analysis that relies on subjective judgments, despite having a standardized approach to economic problems.
Economists, like any other individuals, have their own personal preferences influenced by their background and experiences. Disagreements may arise among economists when they
apply the second and third steps of economic thinking. The model-builder decides on the variables to include in simplified models; nevertheless, since "simplicity" is subjective, this can lead to disagreements from other economists regarding their colleagues' constructed models.
When economists test their models using the available data, there may be debates regarding the reliability and appropriateness of the data as it is typically derived from a sample of the population. Moreover, being argumentative could be considered a characteristic of economists, as noted by Minima who suggested that the qualities essential for excelling in economics might have a negative correlation with agreeableness.
The text suggests that economics may attract individuals with specific personality traits, which might not be the same traits you would want at your dinner party. The sources used in this study include Minima (2007), Tucker (2014), Varian (n.d.), and Wisped (n.d.).
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