Full text: Study week on the econometric approach to development planning

This is the same difference as that existing in pure and in applied 
science. The model is neutral if it constructed by a scientist who has 
a non-emotional attitude to it, has no ideological aims, and who does 
not include views on what ought to be at the base of his construction. 
The model is neutral if it aims to describe and explain the facts. It 
is no longer neutral once it is intended to act on the facts, and this 
is the reason for my complete acceptance of Prof. FriscH’s term- 
inology, distinguishing between explanatory, forecasting and deci- 
sional models. Decision must not be confused with explanation, 
and neither decision nor explanation should be confused with 
forecasting; these are different things. During the discussion I was 
struck by the fact that several speakers appeared to have been 
mainly guided by decisional considerations when constructing their 
Our discussion seems to reveal the existence of two different, not 
to say, opposite approaches to the choice and formulation of economic 
models. Some favor a fully integrated approach associated usually 
with the concept of a decision model. The so-called objective 
function, the description of all structural and behavioral relationships 
and even the methods of statistical estimation of relevant parameters 
are viewed in this case as interdependent parts of a single tightly 
‘ntegrated system. A change in any one of them requires, ac- 
cordingly, modification of all the others, In another alternative ap- 
proach, the description of basic structural relationships, the estima- 
tion of relevant parameters and the choice of relevant objective 
functions are approached as three interrelated, but separable 
problems. A change or a modification in the solution of one of them 
does not necessarily require in this case a corresponding modifica- 
tion of the solution of the two others. 
Although the first approach appears to be more elegant, the second 
might prove to be more useful since it permits replacement or 
1] Stone - pag. 104

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