Economics TOK

“All models are wrong but some are useful.”

Models are wrong due to the our inability to generalise all real life situations into a specific set of principles. Weaknesses occur in models as they are unable to consider all factors that affect the conclusion of the situation, thus leading to these models being inaccurate. However, although models cannot be expected to give us an accurate conclusion or result to explain a problem, they may be used to lead us in the general direction of the answer we seek. An example would be in the subject of economics, models in micro economics such as market failure models will not specifically explain the situation and solution in the market failure, but instead, it is a baseline for economists to understand the reason and general implications of the issue. This model is useful as it allows for economists to build upon the information given by the model, to further analyse and evaluate the situation with case-specific information.