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There's a well known saying by statistician George Box that "All models are wrong, but some of them are useful."

Economic models are like maps, physical models, and every other type of models in that they are gross simplifications of reality.

Like every other type of model, those simplifications can be cause a decision maker to reach false conclusions. When that occurs, we should try to figure out how to improve the models so they are more useful.

The fact that economic models aren't perfect isn't news to the economics profession, but it isn't a realistic expectation either.



But they aren't useful because they are very bad at predicting. There are other tools that are more suited to model the complex and emergent properties of individual actions leading a market place and what its conditions may be.




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