Patrick Power PRO
Economics PhD @ Boston University
Introduction
Microeconomic Analysis
Economics
- Is the study of relationships that make up/influence/shape the economy
- For example, these relationships might be between
- The government and a firm
- Two firms existing in the same market
- A consumer today and that consumer sometime in the future
- Our understanding of these relationships is almost always partial.
- Because the world changes
- Because we often cannot run experiments
Economics
- To better understand these relationships, Economists make use of models and data.
- In this class, we'll focus on the modeling aspect. That is, how economist develop and use models to make guesses/predictions about these relationships.
- The tools and concepts that we'll work with to develop these models (python, automatic differentiation, implicit functions, optimization) are heavily used in the data science community.
The What and the Why of an Economic model
The What
Solver
Focus
Real World
Model
Question
The Why
- To clarify your own thinking
- To be able to communicate your thinking to others
- To evaluate a policy under hypothetical or past scenarios
- To better interpret the statistic results of an analysis
Economic-based Data Science
Components
Real World Events
Optimization
Uncertainty
Math on the Computer
Real World Events/Questions
- How has the pandemic effected the labor supply for teachers?
- Does health insurance improve financial credit?
- Does legal aid in eviction cases improve housing stability?
Optimization
Uncertainty
Math on the computer
def f(x):
return 2.0*x**2Where to write math
On the Computer
- Easily capture heterogeneity
- Easily model uncertainty
- Solving the model is easy (call a solver!)
- Build the model step-by-step
- Easy to visualize
- Hard to capture heterogeneity without some planning
- Hard to model uncertainty without more statistics
- Manually solve the model (takes time)
- Hard to build the model step-by-step
- Cannot visualize most aspects
On Paper
Professor writes down the Model
Student solves optimization problem
Learning how to solve well-posed problems
Typical class
Lecturer writes down question
Student writes down the model
Solver solves the optimization problem
Judgement
Calculus
Statistics
Newspapers/Podcasts
Psychology
Sociology
Finance
Core of Economics
This Class
Write down question
Write down the model
Solver solves the optimization problem
You
Real World Economics
Summary
Course Introduction
By Patrick Power
