Across Brisbane at the moment there is a huge amount of residential construction activity, particularly of apartment towers. Our understanding of supply and demand suggests this will suppress the growth of unit prices in the near future, or in the worst case cause prices to crash as one QUT academic has forecast (e.g. see my post from last October Is a unit price crash coming?). Economists make extensive use of the supply and demand model in analysing economic issues, and therefore an upcoming lecture, considering the history of the “hallowed supply-demand diagram” among other economic models, is of great interest to me.
The lecture on the evening of Monday 18 April at the University of Queensland, St Lucia is titled Models: Facts, Artefacts or Fictions? It is being given by Professor Mary Morgan of the London School of Economics, the leading international authority on the history of econometrics. As the Secretary of one of the sponsors, the Economic Society of Australia (Qld), I will certainly be attending and am very much looking forward to the lecture and I hope you can come along, too (please register via the link provided above).
Prof. Mary Morgan, LSE
Regarding the usefulness of economic models for understanding economic issues, I would recommend Paul Krugman’s “Models and Metaphors” Ohlin lecture from 1992 (published by MIT Press in 1995 in Development, Geography and Economic Theory). In that lecture, Krugman beautifully summed up the power of economic analysis using prima facie abstract models:
“At base, mainstream economic theory rests on two observations: obvious opportunities for gain are rarely left unexploited, and things add up. (Or as I sometimes put it, $20 bills don’t lie in plain view for very long, and every sale is also a purchase.)…Thinking carefully about how self-interested individuals would act in a particular situation, and how these actions would interact, can often produce powerful and surprising insights.”
Yes, economics is full of surprises, and economic models, and indeed economists, are much more interesting and practical than they may at first appear! Please consider attending the lecture on 18 April. I am sure it will be very intellectually stimulating and interesting.