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1.3 • How Economists Use Theories and Models to Understand Economic Issues 17

Economists see the world through a different lens than anthropologists, biologists, classicists, or practitioners

of any other discipline. They analyze issues and problems using economic theories that are based on

particular assumptions about human behavior. These assumptions tend to be different than the assumptions

an anthropologist or psychologist might use. A theory is a simplified representation of how two or more

variables interact with each other. The purpose of a theory is to take a complex, real-world issue and simplify it

down to its essentials. If done well, this enables the analyst to understand the issue and any problems around

it. A good theory is simple enough to understand, while complex enough to capture the key features of the

object or situation you are studying.
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