Journal Article
No. 2019-40 | October 08, 2019
Escape from model-land

Abstract

Both mathematical modelling and simulation methods in general have contributed greatly to understanding, insight and forecasting in many fields including macroeconomics. Nevertheless, we must remain careful to distinguish model-land and model-land quantities from the real world. Decisions taken in the real world are more robust when informed by estimation of real-world quantities with transparent uncertainty quantification, than when based on “optimal” model-land quantities obtained from simulations of imperfect models optimized, perhaps optimal, in model-land. The authors present a short guide to some of the temptations and pitfalls of model-land, some directions towards the exit, and two ways to escape. Their aim is to improve decision support by providing relevant, adequate information regarding the real-world target of interest, or making it clear why today’s model models are not up to that task for the particular target of interest.

JEL Classification:

C52, C53, C6, D8, D81

Assessment

  • Downloads: 1315 (Discussion Paper: 1171)

Links

Cite As

Erica L. Thompson and Leonard A. Smith (2019). Escape from model-land. Economics: The Open-Access, Open-Assessment E-Journal, 13 (2019-40): 1–15. http://dx.doi.org/10.5018/economics-ejournal.ja.2019-40


Comments and Questions


Anonymous - Escape from Model-Land--an impossible suggestion
April 20, 2020 - 15:47

A Theoretical presentation of a macroeconomics situation can only be presented as a conception by the use of a model. So logically, this paper implies that although we want to provide and to study for better understanding some facts about our social system, it is impossible to do so! As ...[more]

... soon as I select a topic about which to write and discuss, a model must be created in the mind's eye of the person receiving my proposal. In the case of a technical subject of which macroeconomics surely comprises, this is a vital way for two parties to exchange information, so I find this present paper to be absurd. I am attaching a paper about modeling our social system in the most simple yet comprehensive way and i would like the author of the "Escape from Model-Land" to explain why it is not applicable to this previously badly confused subject.