Economics TOK

Today we had a special Economics TOK session, we discussed mostly on the usage and purpose of a model. As economics relies heavily on models as almost all content revolves around content, we were given the following claim that “all models are wrong but some are useful”.

My interpretation of this quote means that all models do not convey real life situations and that when applied to the real world, do not work based on the rules and laws that models come up with. This can be from over-simplification as models normally simplify every scenario into one rule. This rarely works in the real world as there are many factors that influence situations that are too complexed to be simplified into a single law or model. For example, the model of neo-classical and kenesiean model depicts the strength of the economy. However neo-classical and kenesiean base this off of just two factors which is aggregated supply and demand, which is determined by a number of factors. However in the real world, other factors could influence the economy, such as political decisions, state of country, which is not included in aggregated demand or supply. Thus showing that the neo-classical and kenesiean model is only a simplification and a summation of the strength of the economy.

However as the quote suggests, some models are useful. For example, going back to the example of kenesiean and neo-classical model, these models help us students who are learning about economics get a better depiction or idea in order to understand the strength of the economy. Other examples of models that help us understand by not just students but the general public are models relating to natural sciences. For example the Bohr-Rutherford model that shows an atoms structure helped students and the general public understand the structure of the atom. Thus showing the models usefulness even though it does not accurately depict real life situations.

I think that although models are not an accurate depiction of models, they are still useful in terms of educational purposes and general understanding among the public. This shows the usefulness of models in general

 

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