Sunday, June 13, 2010

What If Analysis - Discussion Question

Microeconomics is viewed as a fundamental subject - to the social sciences and business disciplines. The principles of economics provide a key foundation for much thinking outside of economics. And with that opportunity cost is viewed at the key primitive concept, though the profession is quite bad at teaching it.

The traditional approach in teaching economics is to begin with certainty, where everything is known to each decision maker, and then introduce uncertainty only after the fundamentals have been learned, to see what impact the uncertainty has on the basic framework. But, as the linked piece indicates, that gives a lot of room to make the basic model quite technical with a lot of math. Might it be better to stick to rather elementary math and introduce complications not in the modeling but rather in the discussion, as in this essay? Or would it be better to go full bore with a more complex model from the get go that acknowledge the uncertainty from the outset?