Question

Why is saying that an economical model is unrealistic, not a valid criticism of a model? What would be a valid criticism of a model?

Answer 1

Like the scientific methods an economist cannot isolate each variable. Due to this reason they make a set of assumptions. Thus the criticism that the economic model is unrealistic cannot be considered as a valid criticism.

An economic model is a simplified representation of a real life economic situation. They use these economic models for forecasting and model making. There are several criticism against economic models. Some of them are,

1. The economic models lack practicality and relevance.

2. Some variables are difficult to quantify which affects the accuracy of the model and thus result in faulty prediction and inefficient policy making.

3. Model omits important variables to be considered and will include irrelevant variables that are no necessary for the model.

4. Inaccurate results.