Samuelson was also the founder of modern mathematical economics, and work showing that

businesses and consumers act rationally to make the most of any situation was later
developed and refined at the Chicago school. For a generation of undergraduate students,
however, Samuelson was simply the author of the bestselling economics textbook of all time
– Economics: An Introductory Analysis– which has sold four million copies in 40 languages
since 1948. His pivotal role in postwar economics was honoured by the Swedish Academy,
which made him the second winner of the Nobel prize for economics in 1970.

Despite the rigorous use of mathematics, Samuelson always recognised the difference
between what economists learned in the classroom and the insights they developed on the
streets – a lesson being relearned following the inability of economists to spot the warning
signs of the current crisis.

Paul Anthony Samuelson was born in the steel town of Gary, Indiana. His father was a
pharmacist, and Samuelson described his family as “upwardly mobile Jewish immigrants”
from Poland.

History

The origin of mathematical economics is often dated back to the late 19th century and attributed to
pioneers like Jevons, Walras and Fisher. The 1870s and the 1880s seem to have been a time of
particularly intense discussion of whether mathematics is the right method for economics or not.

Significane

Mathematics helps economists to perform quantifiable experiments and create models for
predicting future economic growth. Advances in computing power, large-data techniques, and other
advanced mathematical technologies have played a major role in making quantitative methods a
fundamental aspect of economics.

Abstract: Modern economics was born in the Marginal revolution and the Keynesian revolution.
These revolutions led to the emergence of fundamental concepts and methods in economic theory,
which allow the use of differential and integral calculus to describe economic phenomena, effects, and
processes. At the present moment the new revolution, which can be called “Memory revolution”, is
actually taking place in modern economics. This revolution is intended to “cure amnesia” of modern
economic theory, which is caused by the use of differential and integral operators of integer orders.
In economics, the description of economic processes should take into account that the behavior of
economic agents may depend on the history of previous changes in economy. The main mathematical
tool designed to “cure amnesia” in economics is fractional calculus that is a theory of integrals,
derivatives, sums, and differences of non-integer orders. This paper contains a brief review of the
history of applications of fractional calculus in modern mathematical economics and economic theory.
The first stage of the Memory Revolution in economics is associated with the works published in 1966
and 1980 by Clive W. J. Granger, who received the Nobel Memorial Prize in Economic Sciences in
2003. We divide the history of the application of fractional calculus in economics into the following
five stages of development (approaches): ARFIMA; fractional Brownian motion; econophysics;
deterministic chaos; mathematical economics. The modern stage (mathematical economics) of the
Memory revolution is intended to include in the modern economic theory new economic concepts
and notions that allow us to take into account the presence of memory in economic processes. The
current stage actually absorbs the Granger approach based on ARFIMA models that used only the
Granger–Joyeux–Hosking fractional differencing and integrating, which really are the well-known
Grunwald–Letnikov fractional differences. The modern stage can also absorb other approaches by
formulation of new economic notions, concepts, effects, phenomena, and principles. Some comments
on possible future directions for development of the fractional mathematical economics are proposed.
Keywords: mathematical economics; economic theory; fractional calculus; fractional dynamics; lon

Mathematical economics is a theoretical and applied science, whose purpose is a mathematically

formalized description of economic objects, processes, and phenomena. Most of the economic theories
are presented in terms of economic models. In mathematical economics, the properties of these models
are studied based on formalizations of economic concepts and notions. In mathematical economics,
theorems on the existence of extreme values of certain parameters are proved, properties of equilibrium
states and equilibrium growth trajectories are studied, etc. This creates the impression that the proof of
the existence of a solution (optimal or equilibrium) and its calculation is the main aim of mathematical
economics. In reality, the most important purpose is to formulate economic notions and concepts in
mathematical form, which will be mathematically adequate and self-consistent, and then, on their basis

The use of mathematics in the service of social and economic analysis dates back to the 17th
century. Then, mainly in German universities, a style of instruction emerged which dealt specifically
with detailed presentation of data as it related to public administration. Gottfried Achenwall
lectured in this fashion, coining the term statistics. At the same time, a small group of professors in
England established a method of "reasoning by figures upon things relating to government" and
referred to this practice as Political Arithmetick.[9] Sir William Petty wrote at length on issues that
would later concern economists, such as taxation, Velocity of money and national income, but while
his analysis was numerical, he rejected abstract mathematical methodology. Petty's use of detailed
numerical data (along with John Graunt) would influence statisticians and economists for some time,
even though Petty's works were largely ignored by English scholars.[10]

The mathematization of economics began in earnest in the 19th century. Most of the economic
analysis of the time was what would later be called classical economics. Subjects were discussed and
dispensed with through algebraic means, but calculus was not used. More importantly, until Johann
Heinrich von Thünen's The Isolated State in 1826, economists did not develop explicit and abstract
models for behavior in order to apply the tools of mathematics. Thünen's model of farmland use
represents the first example of marginal analysis.[11] Thünen's work was largely theoretical, but he
also mined empirical data in order to attempt to support his generalizations. In comparison to his
contemporaries, Thünen built economic models and tools, rather than applying previous tools to
new problems.[12]

Meanwhile, a new cohort of scholars trained in the mathematical methods of the physical sciences
gravitated to economics, advocating and applying those methods to their subject,[13] and described
today as moving from geometry to mechanics.[14] These included W.S. Jevons who presented paper
on a "general mathematical theory of political economy" in 1862, providing an outline for use of the
theory of marginal utility in political economy.[15] In 1871, he published The Principles of Political
Economy, declaring that the subject as science "must be mathematical simply because it deals with
quantities". Jevons expected that only collection of statistics for price and quantities would permit
the subject as presented to become an exact science.[16] Others preceded and followed in
expanding mathematical representations of economic problems. [17]

Mathematics helps economists to perform quantifiable experiments and create models for
predicting future economic growth. Advances in computing power, large-data techniques, and other
advanced mathematical technologies have played a major role in making quantitative methods a
fundamental aspect of economics

Understanding Mathematical Economics

Mathematical economics relies on defining all the relevant assumptions, conditions, and causal
structures of economic theories in mathematical terms. There are two main benefits from doing this.
First, it allows economic theorists to use mathematical tools such as algebra and calculus to describe
economic phenomena and draw precise inferences from their basic assumptions and definitions.
Second, it allows economists to operationalize these theories and inferences so that they can be
tested empirically using quantitative data and, if validated, used to produce quantitative predictions
about economic matters for the benefit of businesses, investors, and policymakers.

Prior to the late 19th century, economics relied heavily on verbal, logical argument, situational
explanations, and inference based on anecdotal evidence to attempt to make sense of economic
phenomenon. Economists often wrestled with competing models capable of explaining the same
recurring relationship called an empirical regularity, but could not definitively quantify the size of the
association between central economic variables.

At that time, mathematical economics was a departure in the sense that it proposed formulas to
quantify changes in the economy. This bled back into economics as a whole, and now most
economic theories feature some type of mathematical proof.

From Main Street to Wall Street to Washington, decision-makers have become accustomed to hard,
quantitative predictions about the economy due to the influence of mathematical economics. When
setting monetary policy, for example, central bankers want to know the likely impact of changes in
official interest rates on inflation and the growth rate of the economy. It is in cases like this that
economists turn to econometrics and mathematical economics.

Mathematics and economics are complementary disciplines. Most branches of modern economics
use mathematics and statistics extensively, and some important areas of mathematical research
have been motivated by economic problems. Economists and mathematicians have made important
contributions to one another’s disciplines. Economist Kenneth Arrow, for example, did path-breaking
work in the field of mathematical optimization, and in 1994, Mathematician John Nash was awarded
the Nobel Prize in economics for work he did in game theory that has become central to
contemporary economic theory. Haverford’s Area of Concentration in Mathematical Economics
enables students in both disciplines not only to gain proficiency in the other, but also to appreciate
the ways in which they are related.

Economics students with a variety of backgrounds and career interests can benefit from completing
the concentration. The mathematics courses the concentration requires are extremely valuable for
students interested in pursuing graduate study in economics. A strong mathematical background is
also an asset for students going on to business school or graduate programs in public policy. Many
economics-related jobs in government, business, and finance require strong quantitative skills, and
the concentration prepares students interested in seeking such positions.
The concentration can also benefit mathematics majors. Many students find mathematics more
exciting and meaningful when they see it applied to a discipline they find interesting and concrete.
Almost every undergraduate mathematics course covers topics useful in economic applications:
optimization techniques in multivariable calculus, quadratic forms in linear algebra, and fixed point
theorems in topology. In intermediate and advanced courses in economics, mathematics majors can
see how these tools and methods are applied in another discipline.

Mathematical economics is a form of economics that relies on quantitative methods to describe

economic phenomena. Although the discipline of economics is heavily influenced by the bias of the
researcher, mathematics allows economists to precisely define and test economic theories against
real world data.

The origin of mathematical economics is often dated back to the late 19th century and attributed to
pioneers like Jevons, Walras and Fisher.[5] The 1870s and the 1880s seem to have been a time of
particularly intense discussion of whether mathematics is the right method for economics or not. [6]
Although these decades were crucially influential for the further development of the field, it’s
important to note that the introduction of mathematics into economics started well before 1870 and
was a long and drawn-out process.[7] Even before the ground-breaking work of Antoine-Augustin
Cournot in 1838, but especially afterwards, various attempts to include mathematics into economics
were undertaken by different scholars. [8] But as Theocharis notes, between Cournot’s work in 1838
and Jevon’s publication of “Theory of Political Economy” in 1871, the development of mathematical
economics was still rather slow.[9] In contrast to these mathematical attempts, the contributions of
the classical economists are, except for a few uses of arithmetic, entirely discursive. [10]

The Benefits of Studying Mathematics

1. Math is useful. Virtually everyone needs to be able to do some mathematics. ...

2. Math is fun. Most people have experienced the pleasure of getting the right answer to
a difficult mathematics problem. ...
3. Math trains the mind. ...
4. Math is part of our cultural heritage. ...
5. Math is beautiful.

Mathematical economics is the application of mathematical methods to represent theories

and analyze problems in economics. By convention, these applied methods are beyond simple
geometry, such as differential and integral calculus, difference and differential equations,
matrix algebra, mathematical programming, and other computational methods.[1][2] Proponents
of this approach claim that it allows the formulation of theoretical relationships with rigor,
generality, and simplicity.[3]

Mathematics allows economists to form meaningful, testable propositions about wide-ranging

and complex subjects which could less easily be expressed informally. Further, the language
of mathematics allows economists to make specific, positive claims about controversial or
contentious subjects that would be impossible without mathematics.[4] Much of economic
theory is currently presented in terms of mathematical economic models, a set of stylized and
simplified mathematical relationships asserted to clarify assumptions and implications.[5]
Broad applications include:

 optimization problems as to goal equilibrium, whether of a household, business firm,

or policy maker
 static (or equilibrium) analysis in which the economic unit (such as a household) or
economic system (such as a market or the economy) is modeled as not changing
 comparative statics as to a change from one equilibrium to another induced by a
change in one or more factors
 dynamic analysis, tracing changes in an economic system over time, for example from
economic growth.[2][6][7]

Formal economic modeling began in the 19th century with the use of differential calculus to
represent and explain economic behavior, such as utility maximization, an early economic
application of mathematical optimization. Economics became more mathematical as a
discipline throughout the first half of the 20th century, but introduction of new and
generalized techniques in the period around the Second World War, as in game theory, would
greatly broaden the use of mathematical formulations in economics.[8][7]

This rapid systematizing of economics alarmed critics of the discipline as well as some noted
economists. John Maynard Keynes, Robert Heilbroner, Friedrich Hayek and others have
criticized the broad use of mathematical models for human behavior, arguing that some
human choices are irreducible to mathematics.