Abstract
Among all the social sciences, the art of model building is perhaps best developed in economics.Models or theories are conceptualizations of and abstractions from reality; they rely intrinsically on ldquo;if-thenrdquo;statements and should lead to testable propositions if they are to be of any use at all.It would be difficult to give a brief description of all the important characteristics of economic models, for there are numerous types, designed to describe or explain completely different aspects of economic reality. Most of them contain as essential ingredients some statements about the technical environment (e.g., marginal cost curves rise after a certain point) and some statements about human motivation (e.g., the entrepreneur desires to maximize profits; the consumer maximizes utility).The models themselves can have either descriptive or normative use. The Keynesian model or theory “explains” the factors diat cause the level of national income to be what it is and allows one to deduce the direction of change in national income resulting from changes in the parameters. The usefulness of such a descriptive model is determined by whether or not its conclusions are testable propositions. Normative models, most frequently encountered in economics in welfare economics and in operations research, also utilize statements about environment and motivations but do not pretend to predict; infact they merely prescribe. The test of the usefulness of such normative models is whether ornot their prescriptions are at least in principle imple—mentable.

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