On Modeling

Misused financial models contributed to the economic melt-down on Wall Street, leading to the Great Recession.  Financial firms wagered fortunes on mathematical models they did not understand.  Here is an excellent thought on modeling.

The art of model-building is the exclusion of real but irrelevant parts of the problem, and entails hazards for the builder and the reader.  The builder may leave out something genuinely relevant; the reader, armed with too sophisticated an experimental probe or too accurate a computation, may take literally a schematized model whose main aim is to be a demonstration of possibility.

From physicist Philip Anderson's 1977 Nobel Prize acceptance speech, as quoted in Complexity, A Guided Tour by Melanie Mitchell. (page 224).

Mathematical modeling is easily misused, but it is important for working with complex systems.  Mathematical modeling must be a part of our growth as an economic power.

Robert