Theory and Models: Terminology through the Looking Glass

Abstract

Klein and Romero's (2007, ECON JOURNAL WATCH) use of the terms theory and model seems at considerable variance from other common uses, suggesting that divergent usage by other economist-authors may confront readers with substantial ambiguity. Clarity and understanding can be enhanced by sorting out the competing uses of these terms. This paper first sets forth and examines Klein-Romero's use of theory and model. Second, it compares their usage with several different if not antithetical examples in the literature. Third, it provides a tentative classification scheme of model-types to capture the range of usages of this term in economics. Our thesis is that the terms theory and model are incapable of carrying the diverse characteristics different economists ascribe to them. Our classificatory scheme tries to shed light on this possibility, at least for models.

Keywords: models, model building, theory, explanation, relevance, importance

JEL Classification: B4