Mathematical modelling in economics: seeking a rationale

Most methodologists of mathematical modelling in economics consider that models advance understanding, in the sense of providing accounts of how real-world phenomena are produced, and focus on how patently unrealistic models can nonetheless explain. Prevailing interpretations present models as counterfactual credible worlds or useful fairy tales that communicate important messages. The debate has also focused on whether the models’ false assumptions do any of the explaining. In line with Geoff Hodgson’s view that further discussion and inquiry in this area is needed, the chapter engages with these ideas, and defends the proposition that mathematical models in economics do not, and cannot, explain. Since models of this kind involve treating the open system that is social reality as a closed one, they do not merely simplify reality; they distort it. It is therefore hardly surprising that models fail to provide insights into real-world causal relations.