The Secrets Hidden by Two-Dimensionality: Modelling the Economy as a Hydraulic System

Abstract:     

There is a long standing tradition that presents economic activity in terms of fluids flowing around the economy. This idea lies behind a small but influential tradition of hydraulic modelling in economics. However, there is space between using the metaphor of money (or goods) flowing between a lagoon and the sea to the construction of real hydraulic models of simple economic systems. The paper uses examples of pictorial, mathematical and computer generated representations and concrete models of the economy as a hydraulic system, designed (or built) and used by economists over the last hundred years, to explore what we learnt from moving to the 3rd dimension. Experience of such modelling suggests that more can be learnt from an actual 3-D model compared to a 2-D paper design of the same model or compared to a mathematical representation of the system. Two points seem important. First, there appear to be certain aspects critical to the demonstrative success of 3-D models which remain hidden in different 2-D representations. Second, there are cognitive differences between using non-physical models (including computer generated designs) and real object versions of the hydraulic model. So, what is at stake here is not just questions of dimensionality, but also the nature of the representations.

Number of Pages in PDF File: 39

Keywords: model, analogy, metaphor, simulation, economic system

JEL Classification: B00