For example, consider the work of Albert Einstein. Science gives us power. His point was that we should focus more on whether something can be applied to everyday life in a useful manner rather than debating endlessly if an answer is correct in all cases. In the real world, there are too many variables to know exactly what will happen. For example, the Global Positioning Systems (GPS) used in your phone and in your car must take the effects of relativity into account to deliver accurate directions. It is our responsibility to develop a way of thinking about the world that generally fits the facts we have, but to not get so gummed up thinking about things that we never actually do anything. However, the purpose of an economic model is to reduce the complexity of a situation and enable us to derive key economic principles. In retrospect, multiple factors were at play but one key cause was the fallibility of trusted economic models. 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For example Ricardo’s theory of comparative advantage describes two countries producing two separate goods and from this overly simplified scenario, he demonstrates how each country can increase its overall consumption if they engage in free trade by exporting the goods they have the comparative advantage in and importing the other. Statistician George Box said, “Essentially, all models are wrong, but some are useful.” Clarifying what he meant, Box went on to say, “Remember that all models are wrong; the practical question is how wrong do they have to be to not be useful?” I think … a model is an estimate or approximation of a data set. But if you combine them, then you have a strategy that can help you take action right now (The 2-Minute Rule), a strategy that can help you plan your day more effectively (The Ivy Lee Method), and a strategy that can help you maintain consistency in the long-run (The Seinfeld Strategy). Questions about the nature of reality are always interesting. Without general relativity, our navigation systems wouldn’t be accurate. Too many people waste time debating if something is perfectly correct, when they should be focusing on if it is practically useful. As Harvard professor Daniel Gilbert puts it, “The world doesn’t have the luxury of waiting for complete answers before it takes action.”. Over 1,000,000 people subscribe. Box — ‘Essentially, all models are wrong, but some are useful.’ Uncertainty, risk and assumption. There’s often a lot at stake when we model these systems – the economy, the environment, health, jobs and welfare. However, even Einstein's best ideas were imperfect. While these models were trying to simulate complex market forces, factoring-in fluctuations in asset prices and interest rates, they relied on assumptions about human and market behaviour that are almost impossible to accurately predict – people are not always rational and market competition is not always perfect.

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