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Physicists assume things are spheres and use that to solve a bunch of problems. It's important to know 'why' economists use this abstraction for modeling before

Physicists assume things are spheres and use that to solve a bunch of problems. It's important to know 'why' economists use this abstraction for modeling before patently dismissing it. Economists notice that on average, people in the aggregate tend to behave rationally sometimes. Scrutiny should be applied to the assumptions, but it can still help explain economic systems.

titzer 9y ago
In some cases, abstraction can be done without loss of accuracy. For example, in physics we can assume that charges bounded inside a sphere can be modeled as a point charge at the center of the sphere. It's not just a simpler model; it's mathematically equivalent, and provably so.
- ghaff 9y ago
  There are a lot of simplifications that get used in physics and engineering calculations. Ideal electrical circuits, ideal gasses, thin cylinder walls, lossless collisions, etc. etc. Whether or not a given simplification is appropriate depends on the situation (how much accuracy is needed? how close the simplification is to reality? what's the cost of not simplifying?)
  - notahacker 9y ago
    And in some respects, the simplifications are even more justified in economics than physics. Friction between atoms doesn't tend to reduce when people start writing papers finding interesting results contingent on friction being significantly above zero; January increases in stock prices do shrink to the point where they don't represent a viable trading opportunity when traders read papers by Thaler et al on lack of any informational or tax reason for "January effects"
KingMob 9y ago
Your point is good, but it's important to understand the differences in attitudes between them. Physics as a discipline seeks evidence and theories with greater explanatory power. Economics as a discipline seems content to favor modeling over data. Both have useful abstractions and simplifications, but only one stops short of further investigation.
Bromskloss 9y ago
Also, it's the natural reference to which to compare other behaviours.
candiodari 9y ago
It just isn't enough to point out factors are forgotten. If that were the case you could point out that as soon as a chaotic system is involved (like a human presumably is) every prediction goes out of the window if anything resembling a long time frame is assumed. Or you could point out unsolved problems with natural and real numbers that affect pretty much every single science. But for all sciences there's specific issues present as well. Stating these things is at best philosophy, at worst clickbait. It is not enough to name such a factor. One must point out and quantify, firstly, what is wrong, and secondly, how to integrate and model it within the field. When you've done that you still need to campaign for it to be included in the theory and textbooks and so on. Every science has it's known unknowns. Things that obviously matter but aren't in the theory because that's too hard, unknown, doesn't matter enough for the results or even just because important people aren't convinced it is important.

titzer 9y ago

In some cases, abstraction can be done without loss of accuracy. For example, in physics we can assume that charges bounded inside a sphere can be modeled as a point charge at the center of the sphere. It's not just a simpler model; it's mathematically equivalent, and provably so.

ghaff 9y ago
There are a lot of simplifications that get used in physics and engineering calculations. Ideal electrical circuits, ideal gasses, thin cylinder walls, lossless collisions, etc. etc. Whether or not a given simplification is appropriate depends on the situation (how much accuracy is needed? how close the simplification is to reality? what's the cost of not simplifying?)
- notahacker 9y ago
  And in some respects, the simplifications are even more justified in economics than physics. Friction between atoms doesn't tend to reduce when people start writing papers finding interesting results contingent on friction being significantly above zero; January increases in stock prices do shrink to the point where they don't represent a viable trading opportunity when traders read papers by Thaler et al on lack of any informational or tax reason for "January effects"

KingMob 9y ago

Your point is good, but it's important to understand the differences in attitudes between them. Physics as a discipline seeks evidence and theories with greater explanatory power. Economics as a discipline seems content to favor modeling over data. Both have useful abstractions and simplifications, but only one stops short of further investigation.

Bromskloss 9y ago

Also, it's the natural reference to which to compare other behaviours.

candiodari 9y ago

It just isn't enough to point out factors are forgotten. If that were the case you could point out that as soon as a chaotic system is involved (like a human presumably is) every prediction goes out of the window if anything resembling a long time frame is assumed. Or you could point out unsolved problems with natural and real numbers that affect pretty much every single science. But for all sciences there's specific issues present as well. Stating these things is at best philosophy, at worst clickbait. It is not enough to name such a factor. One must point out and quantify, firstly, what is wrong, and secondly, how to integrate and model it within the field. When you've done that you still need to campaign for it to be included in the theory and textbooks and so on. Every science has it's known unknowns. Things that obviously matter but aren't in the theory because that's too hard, unknown, doesn't matter enough for the results or even just because important people aren't convinced it is important.