The idea that economics is more mathematically based and driven is a modern view many economists take today. Jevons was a major proponent of this movement, "as he started the Theory of Political economy by arguing that economics was inherently mathematical because it dealt with quantities" (Backhouse 168). He believed that you could measure the value of economic quantities, and all numerical data that we work with in government and the economy today. This was an interesting perspective to take back in Jevon's time considering the political economy is what many people recognized as the foundation of economics. Now Jevons did have a scientific background which heavily influenced his approach on economics, and led to his belief that you could quantify economics. Jevons placed serious importance on the link between value depending directly on utility. I personally agree with this perspective because I think the amount of consumer's utility attained by a single product or service is what decides the value of it.
Jevons went on to use different algebraic and calculus based formulas to drive utility maximization. "For example he derived the condition that utility would be maximized when the ratio of the marginal utility of two goods was equal to the relative price of two goods" (Backhouse 169). Now approaching this mathematical shift in economics from a larger perspective. Do you think the way of the future in resolving difficult economics decisions should be based off formulas and derivations, or primarily worked on through politics?
I think that given the history and what we have read about Jevons, that his scientific background did indeed affect his approach to economics. However, that does not go to say that the change in the field in approach methods was unwelcome. Adding algebraic methods to the field of economics allows for the application and prediction of theories and market trends. Being able to view numeric progressions and reactions to internal and external factors allows for the measurement of effects upon the market. However, on the opposite side of this argument, the field must have some roots in other disciplines as well, or at least a basic understanding to allow them to communicate their mathematics within a cultural or societal background. This leads into the passage of Heilbroner that we discussed in class today: "...must possess a rare combination of gifts...must be a mathematician, historian, statesman, philosopher...must contemplate the particular in terms of the general, and touch abstract and concrete in the same flight of thought." (285) Looking at this summation, I agree with the qualifications that Keynes laid out as required for a successful economist. The individual economist needs to be able to apply and interpret the mathematical data, but at the same time, transliterate that data into the society to which it is pertinent in time and situation. So, to answer the question, I think the future in resolving difficult economic decisions should be based in formulas and derivations with an understanding of the cultural and societal context within which the economy exists. Politics results from the society, culture, and economics, but it does not necessarily lead to an understanding of economics. If anything, the political world can only attempt to manage the economy. Politics, in what we have seen in the readings for this course, is a field of reaction to the economy, not a field to determine the future of economics.
ReplyDeleteI am definitely in agreement with Sarah in regards to this matter. The mathematical approach is what we use to interpret past economic activity and begin the process of predicting the future activity. It is through the numbers of mathematics that we understand the trends and actions of others. Because there is a division of knowledge, where no one individual or group can know the sum of what everyone else knows or is thinking, the mathematics allows us to gauge people through their actions. In this sense, the mathematics is needed going forward. The philosophical side of economics has allowed for the communication of economics to the world outside the economic community. This form of economics allows for social and cultural conditions to be applied no matter the time period, whereas the mathematical side of economics can be a rather static point in which you are analyzing and interpreting data from one set point in time. Because we live in a world where things have been known to change from hour to hour and day to day, the philosophical side of economics is necessary to constantly communicate economic principles and ideas. It is then that we can use the mathematics to understand the deeper meaning of these ideas and principles in a given set of time and conditions, and thus be better able to predict and analyze things going.
ReplyDeleteI think that mathematics has an important place in the study of economics. However, I think that mathematics is a second step that comes after social and other decisions by market participants. As Gary Becker pointed out, there are many issues in everyday life that cause an individual to make an economic decision. I think that decisions such as those pointed out by Becker, which include discrimination in the workplace, family size, marriage and divorce, and the development of human capital, are the important economic actions and decisions that, once they are made, lead a market participant to act (Becker 38-56). Once they act, they set into effect changes in the economy that then lead to quantitative changes that warrant the use of mathematics. For example, the decision of a family to have another child would consequently increase their consumption. This change in consumption would then create the situation for mathematical analysis. I think that the use of mathematics is important in studying economics but that it is a means to an end and not an end in itself. The study of economics should consider the various factors that affect individuals’ economic decisions which may not, on the surface, appear to be economic-related. After this study, I think, is where mathematics can be used to study the effects of changes which stem from the decisions of individuals.
ReplyDeleteI agree with the idea that mathematics is important to the field of economics and will continue to grow as a vital part in predicting future economic decisions for society but I also agree with Lauren's idea that social factors may be even more important. It is important for economists to understand both the math, philosophical, and social factors of society in order to put forth the most suitable decision or implementation for the economy. I agree that the mathematics come second to the social factors that push economists to pursue the mathematics needed to understand the economic problem. I think Gary Becker's approach to this topic is ideal as well. Like Sarah stated previously on Keynes description of what an economist has to be, I agree that an economist must have a well rounded understanding of the mathematical side, the philosophical side, and the social factors that make up economics. Each work together and it is important for economists to have a great understanding of each.
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