Economists Use Models

Summary

In this script, Benjamin Faust discusses the importance and limitations of economic models. He uses the analogy of a paper airplane and a toy store model to illustrate how models can be good for some purposes, like understanding structure or function, but not for others, such as appearance or practical use. Faust emphasizes the necessity of simplifying complex economic systems to study them effectively, encouraging viewers to embrace learning about economics.

Takeaways

• 🧩 The economy is complex and requires simplification for understanding and discussion, which is where models come into play.
• 🛫 A paper airplane serves as a model for flight but not for appearance, illustrating that models have specific purposes and limitations.
• 🪀 A toy store model airplane may look like a commercial plane but lacks the function of flight, showing the contrast between appearance and functionality in models.
• 💧 An H2O molecule model is useful for visualizing structure but not for understanding dynamic processes like water's interaction with the human body or erosion.
• 🔍 Economic models are used to study the economy despite having their own set of limitations, emphasizing the need for understanding their scope and appropriate use.
• 🤔 The script encourages critical thinking about the models we use and their limitations, suggesting that no model is perfect and each serves a specific purpose.
• 📚 The speaker, Benjamin Faust, is passionate about learning and economics, inviting the audience to engage with the subject matter and seek further knowledge.
• 📈 Models in economics are tools to help us understand and discuss economic phenomena, but they are not without their constraints and should be used with caution.
• 🌐 The analogy of different models, like the paper airplane and the H2O molecule, helps to convey the idea that models are simplifications that capture certain aspects of reality.
• 🔬 The script highlights the importance of models in scientific and economic study, as they allow us to visualize and analyze complex systems in a simplified manner.
• 👨‍🏫 Benjamin Faust's presentation style is educational and inviting, aiming to make learning about economics accessible and enjoyable for the audience.

Q & A

What is the main purpose of using models in economics according to Benjamin Faust?

The main purpose of using models in economics is to simplify the complex economy to make it understandable, discussable, and thinkable.

How does Benjamin Faust describe the limitations of models?

Benjamin Faust describes the limitations of models by comparing them to a paper airplane and a toy airplane. The paper airplane is good for simulating flight but not for looking like a real airplane, while the toy airplane looks like a real one but cannot fly.

What is an example of a model that is good for visual representation but not for functionality?

An example of a model that is good for visual representation but not for functionality, as given by Benjamin Faust, is a toy airplane that looks like a commercial flier but cannot fly when tossed in the air.

What is an example of a model that is good for functionality but not for visual representation?

An example of a model that is good for functionality but not for visual representation is a folded paper airplane, which can fly when launched but does not look like a commercial airplane.

Why does Benjamin Faust use the H2O molecule model in his explanation?

Benjamin Faust uses the H2O molecule model to illustrate how a model can be good for understanding the structure of something but poor for understanding its dynamic behavior or effects, such as how water interacts with the human body or erodes stones.

What does Benjamin Faust suggest about the necessity of models despite their limitations?

Benjamin Faust suggests that despite their limitations, models are necessary in economics because they help us study and understand complex economic systems.

What does Benjamin Faust imply about the relationship between the complexity of the economy and the use of models?

Benjamin Faust implies that due to the complexity of the economy, which has many moving parts, models are essential tools to simplify and study economic phenomena.

How does Benjamin Faust encourage the audience to engage with the content?

Benjamin Faust encourages the audience to engage with the content by expressing his love for learning and inviting the audience to like and subscribe for more content if they enjoy learning about economics.

What is the significance of the paper airplane model in understanding economic models?

The paper airplane model signifies that economic models, like the paper airplane, may not perfectly resemble the real economy but can effectively demonstrate certain aspects, such as the principles of flight in the case of the airplane.

How does the toy airplane model contrast with the paper airplane model in terms of economic modeling?

The toy airplane model contrasts with the paper airplane model by emphasizing the importance of appearance and structural accuracy in economic models, even if they might not capture the dynamic aspects of the economy.

What does Benjamin Faust mean when he says that models 'have limitations' in the context of economics?

When Benjamin Faust says that models 'have limitations' in economics, he means that no single model can capture all aspects of the economy, and each model is designed to highlight specific features or behaviors, inevitably omitting others.

Outlines

00:00

🛫 The Limitations of Economic Models

In this paragraph, Benjamin Faust introduces the concept of economic modeling by comparing it to the use of models in other contexts. He uses the analogy of a paper airplane to illustrate that models can be effective for certain purposes, such as simulating flight, but not for others, such as appearance. Similarly, a toy store model airplane may look like a real one but won't function as a flying object. Faust emphasizes that economic models are simplifications of the complex economy and, while they have their limitations, they are essential tools for understanding and studying economic phenomena.

Keywords

💡Economy

The economy refers to the system of production, distribution, and consumption of goods and services in a particular region. In the video, the economy is described as very complicated with many moving parts, emphasizing the need for simplification to understand and discuss it effectively.

💡Model

A model in this context is a simplified representation of a complex system or process, used to study and understand it better. The video script uses different models, such as the paper airplane and the H2O molecule, to illustrate how models can be useful in different ways but also have their limitations.

💡Paper Airplane

The paper airplane serves as a metaphor for a type of model in the video. It is described as a good model for demonstrating the principles of flight but not for its resemblance to a commercial airplane, highlighting the selective utility of models.

💡Commercial Airplane

A commercial airplane is used in the script to contrast with the paper airplane model. It represents the real-world application and the standard that a model may be compared against, emphasizing the difference between practical functionality and theoretical representation.

💡Toy Store Model Airplane

The toy store model airplane is mentioned as an example of a model that looks like a commercial airplane but does not function as one. It illustrates the limitation of models that may be visually accurate but lack practical utility.

💡H2O Molecule

The H2O molecule model is used to represent the structure of water at a molecular level. It is a good model for understanding the composition of water but not for studying its dynamic interactions, such as its effects on the human body or geological processes.

💡Limitations

Limitations refer to the constraints or shortcomings of a model. The video discusses how every model has limitations, and it is important to recognize these to properly apply and interpret the model in the context of studying economics.

💡Economics

Economics is the social science that studies the production, distribution, and consumption of goods and services. The video script emphasizes the use of models in economics to simplify and understand the complex nature of economic systems.

💡Structure

In the context of the H2O molecule model, structure refers to the arrangement of atoms in a molecule. The script uses this term to explain how a model can effectively represent the physical form of something at a microscopic level.

💡Learning

Learning is a central theme in the video, with the speaker expressing a passion for it. The script encourages viewers to engage in learning about economics, suggesting that understanding models is a key part of this educational process.

💡Like and Subscribe

This term is a common call to action in video content, encouraging viewers to show support by liking the video and subscribing to the channel. In the script, it serves as a conclusion, inviting viewers to continue learning about economics through the speaker's content.

Highlights

Introduction of the speaker, Benjamin Faust, and the topic of economic modeling.

Complexity of the economy with many moving parts necessitating simplification for understanding.

Use of models in economics to facilitate discussion and thought.

Analogy of a paper airplane as a model with limitations in appearance but effectiveness in flight.

Contrast between a paper airplane and a toy store model in terms of appearance and functionality.

Limitations of models in representing the full scope of reality.

Example of an H2O molecule model illustrating its structure but not its dynamic properties.

Importance of models in studying economics despite their limitations.

Different types of economic models and their respective limitations.

The necessity of models to study complex economic systems.

Benjamin Faust's passion for learning and his encouragement for others to learn about economics.

Invitation to like and subscribe for more content on economics.

The role of models in abstracting and representing economic phenomena.

The balance between model simplicity and the accuracy of economic representation.

The practical use of models in economic analysis and decision-making.

The potential for models to evolve and improve over time in response to new economic data.

The importance of recognizing the limitations of economic models in making informed decisions.

The analogy of different models to highlight their strengths and weaknesses in economic study.

Transcripts

my name is Benjamin Faust and today

we're going to talk about how do we

model things in the economy the economy

is very complicated you've got a lot of

moving parts and so we somewhat have to

simplify it in order to understand it to

talk about it to think about it so we

use models I've done a couple of samples

of models here let's say you're making a

model out of an airplane right here I

have a folded paper airplane and this

paper airplane is good as a model in one

way but not good in another way first of

all does it look like the kind of

airplane that you would fly if you were

flying commercial absolutely not so it's

not a good model as far as looking like

an airplane but it is a good model as

far as being able to give some distance

going when you launch it so it's an

excellent model perhaps for flight or

for part of a flight but it's a terrible

model as far as looking like it to

contrast that if you were to get a model

airplane from a toy store and make it

one pretty much identical to the

commercial fliers it might look like the

kind of airplane you take when you go

somewhere but it won't fly if you toss

it in the air

so models have limitations but we use

them because it helps us to study

economics here's another model this is a

model of an h2o molecule this molecule

is good because we can see the structure

of how water looks however is a poor

model if we're trying to see what water

does in action how it treats the human

body when it's when you consume it or

how water erodes stones over time but

it's a good model to see how it looks at

the very small level so in economics we

have various models we use and the

models we use have various limitations

my name is Benjamin Faust and I love

learning

I hope you do too and if you enjoy

learning about economics like and

subscribe for more content