Economics

Until the mid-twentieth century, economists did economics with words. Today, economists do economics with models. That is, they seek to combine elements of theory and evidence through mathematical formalism. The model used may be Marshallian, Walrasian, Keynesian, Cournot, behavioral, or experimental. But it is not economics today if it is not a model. Richard T. Ely's Outlines of Economics provided the framework for the new economics, while Newcomb, a laissez-faire proponent, opposed it. Ely and Newcomb's disagreement on economics launched a Methodenstreit that carried the debate between laissez-faire and new approaches into the twentieth century. In the context of the debate between old and new schools, the American Economics Association (AEA) was born. The chapter presents examples that point to the way economics and model building have become synonymous with each other, both within the discipline and by the public.