Mathematics Statistics Economics

Mathematics Statistics Economics

Mathematics, Statistics. Economics is concerned with quantities, or rather with changes in them at the margin. A characteristic problem is, 'What will be the effect on the demand for labour of a (small) change in wages?' Thus, simple mathematics is implied in economic reasoning. The language and techniques of advanced mathematics are useful in deductive reasoning, although their use in economics may tempt the economist to sacrifice clarity for elegance and to push ahead too far by making assumptions that are correct on paper but are useless for practical purposes. Statistics the science of arranging quantities to show important relationships or trends by expressing them systematically in the form of averages, index numbers, etc is used increasingly by the economist; it is a substitute for the controlled experiments he cannot undertake because social phenomena cannot be isolated.

Mathematical and statistical methods are increasingly being applied to economics; the resulting technique is known as econometrics. This makes it more possible to analyse and study the real world as it is because it enables the economist to handle a number of changing quantities. Thus, in studying movement of trade, it is necessary to examine productive capacity, stocks, new orders, unfilled orders, sales and so on. These categories not only affect employment and demand but also one another. The larger the number of quantities that change ('variables') the more difficult it is to reduce them to words; hence the increasing use of mathematical formulae similar to those used by the natural scientists. In some respects econometrics is similar to the science of meteorology, the study of movements in the phenomena of the atmosphere. And just as meteorology makes possible limited forecasts in the weather, so econometrics is making possible limited forecasts in business conditions. Thus the Econometric Institute of New York was able to foresee with some accuracy the recessions of 2003 and 2007. But owing to the unpredictable human element, forecasting is not likely to be as feasible in the social as in the natural sciences.

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Since then his writings have in turn been increasingly reinterpreted as a special case both by some followers and by some economists who had not wholly accepted his writings. The content of economics is in a state of change, and this consumeraffairs.org.uk site is therefore not a final statement of economic doctrine.

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