55 votes
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Fundamental equations in economics

Instead of proposing specific equations, I will point to two concepts that lead to specific equations for specific theoretical set ups: A) Equilibrium The most fundamental and the most misunderstood ...
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42 votes
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Criticism of Math in Economics

I find that the essay "The New Astrology" by Alan Jay Levinovitz (an assistant professor of philosophy and religion, not an economist) makes some good points. ...the ubiquity of mathematical theory ...
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36 votes

Fundamental equations in economics

As has already been said, the MOST fundamental equation is surely: $$\text{MB}=\text{MC}$$ EDIT: This equation is fundamental in terms of the way economists think. As pointed out in the comments ...
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  • 2,006
36 votes

Criticism of Math in Economics

What is a reason to be against mathematics in economics? The danger that any tool creates: to impose itself on the tool-user, diluting and narrowing its view of the world. It is a matter of Human ...
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30 votes
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How can I obtain Leontief and Cobb-Douglas production function from CES function?

The proofs I will present are based on techniques relevant to the fact that the CES production function has the form of a generalized weighted mean. This was used in the original paper where the CES ...
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28 votes

Criticism of Math in Economics

I would like to point out that the question is not whether we should have math in economics, but why some people attack mathematical economics. A lot of the recent answers seem to try to answer the ...
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24 votes

Fundamental equations in economics

Most of intro econ is intersecting lines. Specifically, $$MB = MC$$ * Equilibrium is achieved when Marginal Benefit is equal to Marginal Cost* $$\dfrac{MU_x}{p_x}=\dfrac{MU_y}{p_y}.$$ Marginal Utility ...
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  • 2,167
23 votes

The Unreasonable Ineffectiveness of Mathematics in Economics

I think by today the arguments you mention are completely outdated. Nowadays, using combination of psychometry and econometrics companies can predict whether you are pregnant (from your shopping ...
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22 votes

Fundamental equations in economics

I once heard Roger Myerson talk about why he thought Economics has, as a Social Science, been so successful in applying (or has so readily incorporated) mathematics. He suggested that perhaps it was ...
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  • 9,155
21 votes

Criticism of Math in Economics

I think there are two important criticisms or limitations. Limit 1: The first, overlapping with what many others have said, is that all mathematic economics are reduced-order models of very highly ...
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20 votes

Fundamental equations in economics

I think one of the most important equations (at least within macroeconomics) is: $$E\left[ m R \right] = 1$$ This equation has been used to derive many foundational results. This equation motivated ...
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19 votes

Fundamental equations in economics

Although I agree with Jyotirmoy Bhattacharya that the most interesting ideas in economics are not always best expressed through equations, I still want to mention the Slutsky or compensated law of ...
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17 votes

Is complex analysis used in economics?

It should be pointed out that just because one encounters complex numbers does not mean one is doing "complex analysis", e.g. complex eigenvalues, complex Borel measures, Fourier transforms, etc. ...
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17 votes

How can I obtain Leontief and Cobb-Douglas production function from CES function?

The regular method of obtaining Cobb-Douglas and Leotief is L'Hôpital's rule. Another methods should be used too. Setting $ \gamma=1$ will be return $Q=[a K^{-\rho} +(1-a) L^{-\rho} ]^{-\frac{1}{\...
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  • 713
16 votes
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What is the point of all the models in an economics degree?

Models are more than just math. Model is a simplification of a reality that allows you to study the underlying mechanisms. Models do not need to be mathematical. Many people actually create models ...
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16 votes
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Conventions for reading mathematically rigorous academic articles in economics

Welcome to Economics Stack Exchange elasticity6565. I was asking myself the same question as an undergrad and found that others struggle with this as well. I am now at the end of my masters degree and ...
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15 votes
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Use of mathematics and imprecise definition of terms

Edesess is attacking what is really just a straw man of economics. I'm not sure he really understands the field. To start, economics is not math. We're not claiming that it is. It's more of an "...
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15 votes
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Applications of Trig functions in Economics?

The main property of trig functions is their cyclicality. Then one would think that they could be ideal in time series analysis, to model "fluctuations around a trend". I believe that the reasons they ...
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14 votes

Criticism of Math in Economics

I think that the opposition to mathematics in Economics mainly has to do with the obstacles it poses to indoctrination. A proposition expressed in terms of a mathematical/logic system is susceptible ...
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13 votes
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Topological concepts in economic theory

I strongly suspect that an emerging important area for applications of measure theory will be in approximate dynamic programming techniques. Approximate dynamic programming (aka "reinforcement ...
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  • 1,048
13 votes

Fundamental equations in economics

I don't think there are any economics equations with the same status as, say, Maxwell's equations in physics. In its place we have concepts like the equimarginal principle, competitive equilibrium or ...
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13 votes

Is there any economic meaning to log returns?

Take the 1st order Taylor series the function $log(x)$. around one: $$ log(x) \approx log(1) + \frac{x-1}{1} = x-1$$ Therefore, for a random variable r that is close to zero: $$ log(1+r) \approx r$$ ...
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13 votes

Applications of Trig functions in Economics?

A natural application of trigonometric functions is in the analysis of spatial data. An example is the Weber problem in location theory - finding the point which minimises the sum of transport costs ...
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13 votes

Criticism of Math in Economics

"All models are wrong; some are useful." The title is really all one needs, but to put a few more words behind it, mathematics is very good at deriving detailed results from very specific premises. ...
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11 votes

Why not talk about utility functions on the surreal line when preferences are lexicographic, etc?

The first thing that comes to mind is that some economic models have more than one agent. If one agent has a utility function with values in ${\mathbb R}$, then two agents have a pair of utility ...
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11 votes
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Uses of convex analysis in Economics

A partial answer: convex analysis is extensively used in axiomatic decision theory, at least in its recent developments. Most of these papers focus on individual behavior. You can have a look for ...
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11 votes
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Economic theory journals for a refinement theorem about utility function representation

For theory you have in order of prestige... (I know subjective) Journal of Economic Theory Theoretical Economics AEJ-Micro (only micro) Mathematics of Operations Research (OR related) Games and ...
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  • 8,642
11 votes

What it is a utility function that it is quasi-concave but not concave?

If you have a single good, so that your commodity space is $\mathbb{R}$, then every increasing function is quasi-concave and even strictly quasi-concave. So any non-concave but increasing function ...
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10 votes

Fundamental equations in economics

A bit late to the game, but I'm surprised no one has named the equation to calculate OLS estimates: $$ \hat\beta=(X'X)^{-1}X'y $$
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