Editing Economic model (section)

== History ==

One of the major problems addressed by economic models has been understanding economic growth. An early attempt to provide a technique to approach this came from the French [[physiocrat]]ic school in the eighteenth century. Among these economists, [[François Quesnay]] was known particularly for his development and use of tables he called ''[[Tableau économique|Tableaux économiques]]''. These tables have in fact been interpreted in more modern terminology as a Leontiev model, see the Phillips reference below.

All through the 18th century (that is, well before the founding of modern political economy, conventionally marked by Adam Smith's 1776 [[Wealth of Nations]]), simple probabilistic models were used to understand the economics of [[insurance]]. This was a natural extrapolation of the theory of [[gambling]], and played an important role both in the development of [[probability theory]] itself and in the development of [[actuarial science]]. Many of the giants of 18th century [[mathematics]] contributed to this field. Around 1730, [[De Moivre]] addressed some of these problems in the 3rd edition of ''[[The Doctrine of Chances]]''. Even earlier (1709), [[Nicolas Bernoulli]] studies problems related to savings and interest in the [[Ars Conjectandi]]. In 1730, [[Daniel Bernoulli]] studied "moral probability" in his book [[Mensura Sortis]], where he introduced what would today be called "logarithmic utility of money" and applied it to gambling and insurance problems, including a solution of the paradoxical [[St. Petersburg paradox|Saint Petersburg problem]]. All of these developments were summarized by [[Laplace]] in his [[Analytical Theory of Probabilities]] (1812). Thus, by the time [[David Ricardo]] came along he had a well-established mathematical basis to draw from.