Most students have seen an image of Ptolemy’s concept of our Universe. Planet Earth forms the centre, with the other planets and our sun revolving around it. The ancients’ anthropocentric view of the universe necessarily placed their planet at the centre. Despite being false, this view of our world worked reasonably well – in the sense that the ancients could predict celestial motions, lunar patterns and the seasons quite accurately.
More than one Greek astronomer believed that it was more natural for smaller objects such as the earth to revolve around larger objects such as the sun, and they knew that the sun had to be larger as a result of having studied eclipses of the moon and sun. Nonetheless, the Ptolemaic description of the universe persisted until Copernicus wrote his treatise “On the Revolutions of the Celestial Spheres” in the early sixteenth century. And it was another hundred years before the Church accepted that our corner of the universe is heliocentric. During this time evidence accumulated as a result of the work of Brahe, Kepler and Galileo. The time had come for the Ptolemaic model of the universe to be supplanted with a better model.
All disciplines progress and develop and explain themselves using models of reality. A model is a formalization of theory that facilitates scientific inquiry. Any history or philosophy of science book will describe the essential features of a model. First, it is a stripped down, or reduced, version of the phenomenon that is under study. It incorporates the key elements while disregarding what are considered to be secondary elements. Second, it should accord with reality. Third, it should be able to make meaningful predictions. Ptolemy’s model of the known universe met these criteria: it was not excessively complicated (for example distant stars were considered as secondary elements in the universe and were excluded); it corresponded to the known reality of the day, and made pretty good predictions. Evidently not all models are correct and this was the case here.
Model: a formalization of theory that facilitates scientific inquiry.
In short, models are frameworks we use to organize how we think about a problem. Economists sometimes interchange the terms theories and models, though they are conceptually distinct. A theory is a logical view of how things work, and is frequently formulated on the basis of observation. A model is a formalization of the essential elements of a theory, and has the characteristics we described above. As an example of an economic model, suppose we theorize that a household’s expenditure depends on its key characteristics: such a model might specify that wealth, income, and household size determine its expenditures, while it might ignore other, less important, traits such as the household’s neighbourhood or its religious beliefs. The model reduces and simplifies the theory to manageable dimensions. From such a reduced picture of reality we develop an analysis of how an economy and its components work.
Theory: a logical view of how things work, and is frequently formulated on the basis of observation.
An economist uses a model as a tourist uses a map. Any city map misses out some detail—traffic lights and speed bumps, for example. But with careful study you can get a good idea of the best route to take. Economists are not alone in this approach; astronomers, meteorologists, physicists, and genetic scientists operate similarly. Meteorologists disregard weather conditions in South Africa when predicting tomorrow’s conditions in Winnipeg. Genetic scientists concentrate on the interactions of limited subsets of genes that they believe are the most important for their purpose. Even with huge computers, all of these scientists build models that concentrate on the essentials.