Abstractions

Economic theories are abstractions—simplifications that omit irrelevant facts and circumstances. Economic models do not mirror the full complexity of the real world. The very process of sorting out and analyzing facts involves simplification and removal of clutter. Unfortunately, this "abstraction" leads some people to consider economic theory impractical and unrealistic. That is simply nonsense! Economic theories are practical precisely because they are abstractions. The full scope of economic reality itself is too complex to be understood as a whole. Economists abstract—that is, develop theories and build models—to give meaning to an otherwise overwhelming and confusing maze of facts. Theorizing for this purpose is highly practical.

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