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Applications of Mathematics in Economics

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Warren Page, editor
Mathematical Association of America
Publication Date: 
Number of Pages: 
MAA Notes 82
[Reviewed by
Allen Stenger
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This is a source book in economic problems for math courses. Each chapter covers one branch of economics. The formats vary a bit, but generally there is a layman’s overview of the economics involved, then a mathematician’s view of the mathematics that supports the subject, and then a number of worked examples of economic questions with mathematical solutions. The book is aimed at mathematicians, not students, so there is no mathematical handholding.

The mathematics is generally at the undergraduate level, including a lot of statistics and optimization. Lagrange multipliers are the primary optimization tool, and there’s no mention of linear programming, even for linear problems.

Chapters 4 and 6, on closed linear systems and on econometrics, are relatively weak and are mostly mathematics with little economics, but most chapters give a very good view of the economics involved. I thought the most interesting chapters were Chapter 5 (behavioral economics: a branch that deals with non-rational consumers) and chapter 8 (Topics in Finance: mathematical models in the stock and options markets, including a look at their somewhat shaky assumptions).

The book really needs an index, especially since it is organized by economic subject but you would most likely use it to illustrate particular mathematical techniques. There’s no easy way to find where some particular technique such as multiple linear regression is used. On the plus side, each chapter has a good bibliography of scholarly economic works.

Allen Stenger is a math hobbyist and retired software developer. He is an editor of the Missouri Journal of Mathematical Sciences. His mathematical interests are number theory and classical analysis.