Sixty-odd years ago, when von Neumann
& Morgenstern’s ‘Theory of Games...’ was first published, it was dismissed by the
academic community as ‘ unreadably mathematical (which, in truth, it was).
Indeed, similar was the fate of even Keynes’ General Theory, which a certain Professor
of Economics happened to open on one of the very few pages containing
mathematical equations, and consequently threw it down in disgust, saying ‘This
is the end of John Maynard Keynes’ (The
History Of Game Theory, vol.
1). Six decades on, the wheel of fortune has turned and it is
time for economic papers with little or no maths to find their way to the trash
bin as pointless cheap talk.
One thing hasn’t changed,
though – math is still hard. It takes plenty of time to express one’s ideas in
its universal language and, if successful, for others to understand them. In
fact, using a tool so imposing sometimes makes it easy to confuse the
mathematical reality it’s based on with the economic one, which is supposed to
be the actual subject of investigation. Time after time, a theorist finds
herself pondering the choice between a more realistic model specification and
one that is nicely tractable, leading to aesthetically pleasing solution
formulae. Similarly, an economics student might let the technical details of a
framework obscure the simple logic and economic intuition behind it.
The solution lies, in my
view, in using the latest developments in computer science to introduce a
meta-language that would allow focusing on the economics, not the mathematics
of the problem at hand. I believe that the Wolfram Mathematica package makes it
possible to do just that and this blog is dedicated to promoting its use in
economics. Rather than to provide a tutorial on using this software, I will aim
to give a flavour of how Mathematica can be used to set up and analyze a model,
and to demonstrate it to both the academic peers and students. To keep things
relatively simple, I will use well known economic problems, obtaining and
visualizing the solutions in ways that will contrast the conventional textbook
approach.
