Economic modelling

William Bruce Cameron (Sociologist, 1963) often wrongly credited to Albert Einstein - Not everything that can be counted counts, and not everything that counts can be counted.

Lewis Carroll - “What do you consider the largest map that would be really useful?” “About six inches to the mile.” “Only six inches!” exclaimed Mein Herr. “We very soon got to six yards to the mile. Then we tried a hundred yards to the mile. And then came the grandest idea of all! We actually made a map of the country, on the scale of a mile to the mile!” “Have you used it much?” I enquired. “It has never been spread out, yet,” said Mein Herr: “the farmers objected: they said it would cover the whole country, and shut out the sunlight! So we now use the country itself, as its own map, and I assure you it does nearly as well…”

Ronald Coase - In my youth, it used to be said that what was too silly to be said may be sung. In modern economics, it may be put into mathematics.

Coluche - Quand on est malade, il ne faut surtout pas aller à l’hôpital : la probabilité de mourir dans un lit d’hôpital est dix fois plus grande que dans son lit à la maison. When you are sick, do NOT go to a hospital: the probability of dying in a hospital bed is 10 times that of dying in one's bed at home.

Milton Friedman (1978) - We don't insist that people always behave rationally, what we insist on is that you are not able to predict random irrational behaviour, and therefore the only kind of behaviour you can hope to predict is behaviour which has some kind of regularity and (...) we're not really concerned with individual behaviour, that's the role of the psychologist or the physician, we're concerned with group behaviour, and if I take a large number of people, many of them may behave in all sorts of crazy ways, but the group as a whole, the common tendency, the thing that's going to come out of it, is going to be something which will be as if it were rational behaviour.

John Kay - Economic models are illustrations and metaphors, and cannot be comprehensive descriptions even of the part of the world they describe. There is plenty to be learnt from the theory if you do not take it too seriously.

John Maynard Keynes (letter to Roy Harrod, July 1938) - Economics is the science of thinking in terms of models joined to the art of choosing models which are relevant to the contemporary world.

David Lazer & Allan Friedman (2007) - All social science research must do some violence to reality in order to reveal simple truths.

Axel Leijonhufvud (1997) - Formalism in economics makes it possible to know precisely what someone is saying. But it often leaves us in doubt about what exactly he or she is talking about.

Andrew Lo - The failure of quantitative models in economics and finance is almost always attributable to a mismatch between the level of uncertainty and the methods used to model it.

Alfred Marshall (in Principles of Economics) - If we include in our account all the conditions of real life, the problem is too heavy to be handled; if we select a few, then long drawn-out and subtle reasonings with regard to them become scientific toys rather than engines for practical work.

H. L. Mencken - For every problem there is a solution: neat, plausible and wrong.

Steven Pinker - You actually put a person in a situation where there’s real money at stake, and all of a sudden they’re not so irrational.

Paul Smaldino (in Models are stupid and we need more of them, 2016) - Verbal models can appear superior to formal models only by employing strategic ambiguity.

Robert Solow (2013) - If God had meant there to be more than 2 factors of production, He would have made it easier for us to draw 3-dimensional diagrams.

Henri Theil - Models are to be used but not to be believed.

Amos Tversky (Psychologist, founder of behavioral economics) - My colleagues study artificial intelligence; I study natural stupidity.

Paul Valéry - Tout ce qui est simple est faux, tout ce qui est compliqué est inutilisable. Everything that is simple is wrong, everything that is complicated is unusable.