Economic modeling as an artistic activityA tribute to Trygve Haavelmo

Philippe Le GallUniversity of Angers, France

Trygve Haavelmo Centennial Symposium,University of Oslo, December 2011

Presented by Ariane Dupont-KiefferIFSTTAR, France

INTRODUCTION 2

The paper

• The starting point: “The construction of tentative models (…) is a creative process, an art” (Haavelmo 1944, 10).

• Exploration of such an artistic conception of economic modeling...

• … given the fact that Haavelmo was an amateur painter

NB: this is a preliminary, exploratory work.

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Some origins of the paper

• Intersection of a research program (history of economic models and of econometrics) and “hobbies”

• Existing literature in:

economics (e.g. Leonard, HOPE 1999) history and philosophy of science (e.g. Feyerabend, McAllister, ISIS 2007)

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The model (1/2)

• “Experiments that we should like to make to see if certain real economic phenomena when artificially isolated from ‘other influences’ would verify certain hypotheses” (Haavelmo 1944, 14).

• “Artificial economic systems that can serve as laboratories in which policies (…) can be tested” (Lucas 1980, 696), “something that can be put on a computer and run” (1988, 5).

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The model (2/2)

Three features:

An experimental framework A fictional environment (hypotheses, small number of parameters and

variables, specific time and space …) A structure (reasoning)

Models are thus (direct or indirect) representations of some aspects of the real world.

The question: What do they share with other kinds of representations, especially in art?

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The aim of the paper

• A comparative analysis of economic modeling and artistic representations (painting, literature)

• Two common features:

The construction of an idealized world The construction of a “story” (Morgan)

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I. THE CREATION OF WORLDS

Both the modeler and the artist construct a representation of the world, a representation partially or fully fictional.

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I-a. The construction of a model:“now, imagine” (Lucas 2000, 160)

The definition and the construction of the world constructed by the modeler:

• “Let us consider …” (Lenoir 1913, 7).• “Let us assume that ... ” (Lenoir 1913, 13).• “Let us imagine that this has been accomplished …” (Lucas 1976, 32).• “Assume that …” (Haavelmo 1944, 36).

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Thus, the model describes a hypothetical, a fictional world:

• “Now, imagine”: a distance from the real world• “Any model (…) will necessarily be artificial, abstract, patently ‘unreal’”

(Lucas 1980, 696). • A model is a “fiction” (Lucas 1980, 711; Cartwright 1983).

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Some examples:

• Fama’s efficient market (1970), in which:

Information occurs randomly, is free and exhaustive Agents are strictly rational (including their expectations) and know

the “true” model of market equilibrium

• Lucas’ description of an individual as a “robot” (1988)

• The absence of historical time in some models:

Some models are static (Lenoir 1913) In some models, time is a logical, a specific time defined by the

model (Walras, Fama, Lucas) In others, time is an analytical time (Frisch, …) 11

More generally:

• A model is a fictional environment• The modeler refers to real facts, but in order to understand, to

simulate, or to forecast them, s/he works in a hypothetical, fictional framework s/he defines and constructs.

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I-b. The creation of a world in arts:the case of painting

• The idea: how an artist can represent a fictional world close to a model

• Main case study: Mo’s representation of “urban landscapes”• An example: “Centre G. Pompidou” (2006)

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Haavelmo’s paintings: the construction of specific images of the world:

• Simplification, isolation• Complexity, non continuity, and underlying structure• A parallel with one feature of The Probability Approach: an

indeterministic world?

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II. THE CREATION OF STORIES

Both the modeler and the artist devise “stories”. Such stories may be impossible in the real world, but can be coherently imagined in the fictional world which is constructed.

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II-a. Models and stories

• The structure of models: logical demonstrations, established within the frame of fiction.

• Such demonstrations are “stories” (Morgan).

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Morgan (2002):

• (A) A question can stimulate the creation of a model, and its structure is a story.

• (B) This story provides answers to questions:

What happens if a change in parameters/variables is introduced?e.g. IS-LM: “What happens if government expenditure increases of X% ?”

What happens if a hypothesis is changed?e.g. perfect competition: “What happens in the model if information becomes imperfect? ”

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II-b. Stories in literature

• In literature, especially science fiction, stories constructed within a fictional environment can also be found.

• Example: Wells’ Time Machine, Crichton’s Timeline

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II-c. Fictional stories: A coherence principle

When compared to the real world, such stories may be impossible.

• “a frictionless market” which “is, of course, not descriptive of markets met in practice” (Fama 1970, 387).

• Travelling through time (Wells, Crichton)

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How the robustness of such stories can be evaluated?

• Not on the basis of a comparison with the real world• but within the hypothetical, fictional world of the story, i.e. in its

own context.• This refers to a coherency principle of fictional stories

(Barberousse and Ludwig 2000) …• … at work in modeling and in arts

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CONCLUSION. MODELING AS “AN ART” 24

Of course, modeling and art differ:

• The modeler belongs to a scientific community, characterized by more formal (rigorous) rules than an artistic community (training, experience…)

• Technical (mathematical) constraints• Models contribute to shape the world more radically (normative

dimension of models).

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However, Haavelmo rightfully thought that the modeler is (should be?) a kind of artist:

• From her/his worldview, he creates small worlds• S/he devises stories• This requires imagination

The modeler can thus behave like artists (in painting, literature), and some economic models thus show how s/he can be an active, and imaginative, devisor.

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Cf. Lucas’ Professional Memoir (2001):

• The Memoir opens with developments on arts (1-2)• Then Lucas mentions his discovery of Brahms (3) • And for him, mathematics are “beautiful” (15)

What would reveal here the economist’s unconscious?

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