The introduction of Mathematical methods into Economics has been a long process passed through various stages. Initially, it began with a total rejection, followed by a partial acceptance. Pieces of mathematical reasoning applied to economic problems have been found as far back in history as in Aristotle’s work. In 18th and 19th Century, Bernoulli, Gauss, Laplace and Poisson developed mathematical models to discuss economic problems. However, Economics became more mathematical as a discipline throughout the first quarter of the 20th century, but introduction of new and generalized techniques in the period around the Second World War, broaden the use of mathematical formulations that led to the major development of mathematization of the Economics. Now, it is being widely accepted as a tool to be very useful in improved Economic Theory and Modeling for policy formulation and providing corrective measures for deficiencies or shortcomings of existing policies with better sense and sound judgment. Having a fair idea of economic problems with expert knowledge supplemented by appropriate mathematical techniques do provide a better formal intuitive insight into the problem and can promote one’s understanding in a systematic and consistent form. Empirical support and mathematical logic makes the theory more easily understandable so that some otherwise confused and ambiguous observations can be visualized within a proper perspective. Economic reasoning based on mathematics has been a fundamental factor in the development of economic theory as a science. Some challenges of mathematics and certain prerequisites and concepts may push the readers away from modern Economics, but knowledge of some important tools of mathematics provides a convenient alternative between intensive and extensive points of view and may end up providing a grasp of the both.
Cite this article:
Rakesh Sharma. Role of Mathematics in Economic Theory and Modeling. Int. J. Tech. 2016; 6(2): 170-174. doi: 10.5958/2231-3915.2016.00026.2