Math at Applied Economics

One needs mathematics to do economics; parts of calculus and parts of linear algebra are our workhorses.

 

However, one doesn’t need advanced mathematics in the sense of a mathemetician to do serious economics. It has been said that the only truly advanced mathematics ever used by Nobel laureates in Economics has been in connection with general equilibrium theory [Eugene Silberberg, The Structure of Economics—A Mathematical Analysis, McGraw Hill, 2^nd ed., 1990]; at an opposite extreme, one of the laureates, Ronald Coase, illustrated his seminal ideas with nothing more abstract than arithmetic examples! 

 

More especially, concepts which we need every day, such as the partial derivative and constrained optimzation, mathematics departments might postpone until, say, a Calculus III course, but are actually easy to learn and easy to use. In like manner, we need some linear algebra, such as matrix operations, including inversion, especially for our Econometrics sequence, but we hardly need much.

 

To enter our program as a degree candidate we merely require Calculus I [or Calculus for Business, or Calculus for the Social Sciences, or two semesters of High School Calculus]. Such a course covers noticeably less than our own Mathematical Methods for Economists course [required only of those without any calculus], which in turn covers somewhat less than the mathematical material actually used in our program. We adopt this approach because we believe that if you have learned Calculus I, or an equivalent, you will be in a good position to learn additional mathematical material in various classes, or on your own, according to lectures or pointers given by your instructors, perhaps using textbook appendices or their own notes.

 

To support this learning process systematically, we encourage all our students, whether or not they choose, or are required, to take our Mathematical Methods for Economists, to study

 

This text is highly recommended because it lies between “chatty” math books and "definition - operation - proof” math books. It can accompany you throughout your time at our program, and beyond. There is absolutely no need to learn even nearly the whole content of the book, and you can always use it as a reference. Buy used; save 50%. This is a small investment with big returns for half a lifetime or longer.

Alas, no one book is perfect: Simon and Blume are short on excercises, and one must do these to learn to use the math. Therefore, it is recommended that you purchase one of several low priced Schaum’s Outline Series books on the subject and do some of the excercises at your own pace, for example and especially

Edward T. Dowling, Schaum's Outline of Mathematical Methods for Business and Economics, McGraw Hill, 1992.

The table of contents of this book gives a fair idea of the minimum math needed in our program.