PONTIFICIAE ACADEMIAE SCIENTIARVM SCRIPTA VARIA
can be ‘given’ in all its details by a central authority; an
obvious example of this is the composition of consumers’ expen-
diture. Another reason is that objectives are multiple and
conflicting: many of them can be satisfied in several ways
which have substantial, differential effects on others. Finally,
it is impossible to state the objectives that make up a policy
without knowing a great deal about feasibility and cost. In
each case the necessary knowledge can only come from the kind
of analysis that a model is designed to provide.
An important question at this stage is the range of problems
that the politician would like to see integrated. For example, if
the model is a national model with no regional dimension, it
can say nothing about locative problems. If there is to be a
regional aspect to economic policy, then the model must be
capable of providing solutions for the different regions. A re-
gional dimension to an economic model is useful because it
makes people think why they want particular things to take
place in particular localities and enables them to compare the
costs of the alternatives.
Thus we see that the politician needs the help of the model-
builder in formulating a policy, just as the model-builder needs
the help of many other people in building his model. We also
see that the objectives from which the policy will be shaped get
into a model in various ways.
An objective may be built into the model. This is the case
where it is agreed that private consumers should be left to decide
how they spend their money. In effect the policy maker says to
the model-builder: I shall tell you how much money to assume
available for private spending; your job is to find out how this
spending will be allocated given the shadow prices that emerge
from your model, and what indirect demands it will place on
the system. In the course of drawing up the policy, alternative
calculations are sure to be needed, but the maximisation of the
average consumer’s utility forms an integral part of the model.
Or, an objective may form a constraint on acceptable solu-
[1] Stone - pag. 20