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An economic model is a framework used to predict economic trends with a considerable degree of precision. They are used at the micro and macro level. The primary purpose of an ideal economic model should be to take the analyst as close to reality as possible. Unfortunately, even with the presence of several techniques, economic models can end up being disastrously misleading. Speaking of techniques, critics of economic models are coming down heavily on their blatant failure to predict any crisis. Here are some reasons.

Flawed Techniques
Human behavior is too erratic to be having a mathematical representation. Stochastic models allow a lot of randomness, whereas non-stochastic economic models pump in too much of logic, especially when it comes to predicting consumer choices, making the results go haywire. Ultimately, an algorithmic equation cannot replace the complex human thought process. Adding variables to it will only make it applicable in a ‘perfect’ world.

Unfeasible Qualitative Models
Bringing in equations to mimic human behavior is the basic flaw in economic models. But the absence of any mathematical representation, as in the case of qualitative models, increases the unreliability factor further. Qualitative models have the reputation of being imprecise.

Ignoring Simplification
Considering the complexity of arriving at a decision in business, an economic model is created with the aim of making things simpler. It plays the role of a guide, giving us a feel of the real world conditions. However, by bringing in too many variables, it ends up being the exact opposite. Models that are too complex make interpretation difficult, thus defeating the purpose of having one in the first place.

‘Good’ is Not ‘Practical’
What defines a ‘good’ economic model? The one that is crammed with variables to paint an accurate picture of reality? Or is it the one that zeroes in on the nature of the problem, making appropriate recommendations to combat it? No prizes for guessing that it is the second one. Trouble starts brewing when economists get carried away trying to make it a mathematical procedure by compromising on reality. There exists a thin line between ‘good’ and ‘useful’, really. Read the rest of this entry »

There are five essential things that you should know about local search marketing: It is becoming an effective marketing alternative to the yellow pages, it allows the business to specifically target local prospects, you can hire professionals to handle search marketing for your business, there are three major search engine players, and smaller local search engines can be an effective alternative.

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The city of Wentzville has hired Larry W. Tucker as marketing and business development manager. His first day will be Feb. 14.

Visit link: Wentzville fills newly created marketing and business development position

Bellwether survey finds business confidence among executives dropped to the lowest level for a year and a half UK marketing executives cut their budgets in the final three months of 2010 by the biggest amount in a year as confidence in the outlook for 2011 plummeted, according to the latest Bellwether survey. The influential report, jointly produced by the Institute of Practitioners in …

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