An economic model is just a story without any holes in it. A good economic model is a credible story without any holes in it.
P.S. Why The Lord of the Rings is a great story but a terrible model.
Aug 30 2011
In my tribute to the late Bill Breit of Trinity University, I promised to retell a story from my book, Making Great Decisions in Business and Life, co-authored with Charley Hooper. Here it is: A Nobel prize-winning economist was to be guest of honor at a large dinner party at a Texas university. A professor from the u...
Aug 30 2011
Don't miss Tyler Cowen's excellent post on the size versus the length of fiscal stimulus. Key passages:For all the talk of a "large stimulus," you don't hear much about a "longer stimulus."... Ideally a stimulus employs some idle labor, stops it from depreciating, and tides those workers over until they can look ...
Aug 29 2011
An economic model is just a story without any holes in it. A good economic model is a credible story without any holes in it.P.S. Why The Lord of the Rings is a great story but a terrible model.
READER COMMENTS
Foobarista
Aug 29 2011 at 7:20pm
…and here’s why Lord of the Rings makes a truly awful AD&D campaign, even though it arguably kicked off the whole D&D thing…
http://www.shamusyoung.com/twentysidedtale/?p=612
Tracy W
Aug 30 2011 at 8:22am
Normally I’m the one defending economics, but how many economics models have no holes in them? Comparative advantage is the only one that springs to mind. Everything else, even free trade, people quarrel with and you wind up arguing about empirical stuff.
Norman
Aug 30 2011 at 4:38pm
Tracy, people quarrel with the credibility of the assumptions used. But given the assumptions, the models work, no logical gaps or holes. The quarrels are about credibility.
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