By Matt Johnson
In this short blog, I will illustrate one way an urban dynamicist, i.e., systems scientist, looks at an economic system and its data.
Diagram 1 is hierarchical, derives from the U.S. Census Bureau, and represents a few of the many levels of an economic system. Moreover, each level of the economic system in Diagram 1 is further a sub-system, or sub-economy, of the general United States economy.
This means that a zip code, for example, can be examined as an economic system, and then it can be compared and contrasted with a city’s economic system. And this examination will illustrate similarities and differences between a sub-system, a zip code, and a general system, a city, for instance.
Thus, an urban dynamicist can partition out each level of the economic system and analyze each level as a distinct entity, although one system is still a sub-system of the one superior to it in the hierarchy. Within each level, differences, relationships, perspectives, dynamics, and models can be examined through data.
As stated before, each level of the system can be analyzed against the other levels of the system through data, because data provides a picture at each level of the system. For example, the State can be illustrated and compared to the Division, Zip Code, or Census Tract via crime densities, demographic comparisons and migration patterns, and economic variables such as median household incomes, unemployment rates, the labor force and labor participation rates.
Here is the stochastic (probabilistic) behavior of the labor force in Minneapolis over the past 10 years as seen here in Graph 1.
And here is the stochastic (probabilistic) behavior of the Minnesota labor force over the past 10 years as illustrated in Graph 2.
Future articles will delve deeper into the specifics of the behavior and dynamics of these two systems and their respective data sets. For now, the main point is that data can provide a picture of the economic systems at their respective levels of the system.
One last thought, Diagram 1 does not illustrate the interactions or dynamics that take place within each level of the system by itself, nor does it account for a lot of things. This is why the data is needed. So assumptions and conclusions should be limited.
As this focus on data continues, I will be utilizing the hierarchical model and other systems models to help illustrate and explain how economic systems can be better understood. In addition, I will be using systems theory along with applied mathematics to explore the complexity of systems. But I will also be working diligently and meticulously to convey this information to you the best I can.
As I get better at explaining this stuff to you, I hope your knowledge of systems, mathematics, and economics increases as well.
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Photo credit: Pixabay
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Categories: Economic Systems