Role of mathematics in economics pdf

To learn more, view our Privacy Policy. To browse Academia. Log in with Facebook Log in with Google. Remember me on this computer. Enter the email address you signed up with and we'll email you a reset link. Need an account? Click here to sign up. Download Free PDF. Importance of Mathematics in Society developement.

Rama Jain. A short summary of this paper. Download Download PDF. Translate PDF. Mathematics and its importance 2. Development 3. Need and role of Mathematics in the changing Society for its development. History of Mathematics reveals that whenever a society gave due weightage to the knowledge of Mathematics, it has made a tremendous progress.

Mathematics makes its contribution in the advancement of science and technology. Mathematics is the common heritage of mankind and it is not the exclusive property of any particular nation, race or country.

What we possess in the form of Mathematical knowledge today is the fruit of the combined efforts of all human beings. So it is no exaggeration to say that history of Mathematics is the history of civilization. When we go through history, we can see further, the contributions from Romans, Chinese, Japanese, Arabs and Indians to Mathematics.

A close and careful study of the history will reveal the fact that ancient civilizations are very much related to the development of Mathematics. If mathematics is taken to be that body of mathematical knowledge which sits above or outside of human interests, then by definition social interests can only be involved in the practice of mathematics, not in mathematics itself.

It involves calculations, computations, solving of problems etc. It is exact, precise, systematic and a logical subject. Mathematics reveals hidden patterns that help us to understand the world around us. Now, much more than arithmetic and geometry, mathematics today is a diverse discipline that deals with data, measurements and observations from science, with inference, deduction, and proof; and with mathematical models of natural phenomena, of human behavior, and of social systems.

It has historically developed, through the use of abstraction and logical reasoning, from counting, calculation, measurement, and the study of the shapes and motions of physical objects.

There are many definitions of mathematics but no one definition of mathematics is universally accepted. It is a systematized, organized and an exact branch of science. If we imagine that there were no mathematics at all, how would it be possible for us to count members of the family, number of students in the class, rupees in the pocket, runs in a cricket match, days in a week or in a month or year? On a basic level we need to be able to count, add, subtract, multiply, and divide. Mathematics is around us.

It is present in different forms; right from getting up in early hours of the day to the ringing of an alarm, reading time on a watch, rounding a date on a calendar, picking up the phone, preparing a recipe in the kitchen, to wait for the counts of whistles of the cooker, manage the money, travel to some place, to exchange currency at a ticket outlet while availing a public conveyance or checking up the mileage of your car, halting at the filling station, attending to a roll call at school, getting scores in the class exams, almost every next moment we do the simple calculations at the back of our mind.

Of course these are all done pretty unconsciously without a thought being spared for the use of mathematics on all such occasions. We surprisingly have a long list of role of mathematics in our recreational activities, such as: video games, computer games, puzzles, riddles, hockey, cricket, kho- kho, kabaddi, football, basketball etc.

All the above games require an instinctive awareness and utilization of space. While doing crosswords, we need to see length of the words we fill in, the matching of the common letters, and so on. While playing board games like chess , we need to think of a winning strategy. For this we need to construct the possible movement at any instant, giving the conditions under which the different pieces are allowed to move.

In Ludo, Chaupad, Trade, and other such games, the players use a lot of mathematics. Even nature also embraces mathematics completely. We see so much of symmetry-around us and have a deep sense of awareness and appreciation of patterns, such as-change of day into night, summer into winter etc.

The sun rises and sets at specified moment. The stars appear at fixed time. In plants there are innumerable examples of symmetry, shapes, patterns, etc. This method is not only in theory or in practice, but also has a great deviation. The financial problems and countermeasures by using the differential method to non geometry in the financial field of the Brown distribution has important use, not only can effectively relax this assumption can also be uncertain disturbances become hostile to the illusion of hand.

The stability robustness of the strongest portfolio strategy can be obtained through the optimization analysis of the whole uncertain problem. At the same time, in the process of entering the field of the analysis of the problem in using differential game method, only needs a Behrman equation, and this equation belongs to the first-order differential equation is two order partial differential equation to solve the problem of random in much simpler.

So, the application of differential game method to study the problems in the financial sector will have broad prospects, especially has very important significance for the study of the random strategy, repeat, combination and other financial problems of securities investment.

Using differential game method to study option pricing problem and investment decision problem is an important direction of the development of modern financial theory, and some achievements have been achieved. When the financial market does not satisfy the steady-state assumption or abnormal fluctuations in stock prices, often do not obey the geometry Brown motion, then using the method of random dynamic model of securities investment decision problems both in theory, or in fact there is deviation from.

Using the differential game method to study the financial decision problem can relax the hypothesis. The uncertainty disturbance is assumed to be a hostile one, and the optimal investment strategy with strong robustness can be obtained by optimizing the worst case. In addition, the Behrman equation for differential games is a first-order partial differential equation, which is much simpler than the two order partial differential equations for stochastic control problems.

Therefore, the application of differential game method to the study of financial problems has broad application prospects. Markowitz Markowitz, the dispersion of investment portfolio theory and efficiency for the first time as a means of rigorous mathematical tools to show a method for risk averse investors how to construct the optimal portfolio of risky assets in many.

It should be said that this theory has a strong sense of normative, which tells investors how to make investment choices. Sharpe, , Linter J. Lintner, and mossim J. Mossin, as the representative of some economists began from the empirical point of view, to explore the reality of securities investment, namely Markowitz theory applied in reality can be if investors are using simplified?

Markowitz portfolio theory to select the optimal portfolio, then the equilibrium prices of assets will be how to balance the return and risk in the form? Or, in the market equilibrium, asset price risk and how to determine? The research of these scholars has directly led to the emergence of the capital asset pricing CAPM model.

It should be said that, as a kind of objective of risk asset equilibrium price decision theory, single index model, and based on CAPM not only simplifies the computation process of portfolio selection, the Markowitz portfolio selection theory in the real world a big step forward, but also makes the securities theory from the previous qualitative analysis to quantitative analysis, empirical turn from the normative, then the securities investment theory and practical operation, which has a great influence even to the development of financial theory and practice, has become the theoretical basis of modern finance.

Of course, in recent decades, as the focus of the capital market equilibrium model of attention, in the form of CAPM has been far beyond the traditional form, and put forward the SHARP Lintner Mossin, has made great progress, such as arbitrage pricing model, intertemporal capital asset pricing model, consumption capital asset pricing model, has formed a the system of capital market equilibrium theory [3].

In the mathematical application of the current financial theory, another important application field is the use of mathematics to solve the stochastic problems in financial problems. The theory of stochastic optimal control is an important method and means to solve the financial problems with mathematical theory. Stochastic optimal control is advanced in the development of the control theory gradually developed, through the application of Behrman principle in combination optimization, measure theory and functional analysis method of stochastic problem analysis.

This method was formed in the late 60s of the last century, and became mature gradually in the early 70s. The problem is tht it does not understand me back. In high school we had several mathematics classes including on in business math and economics.

It was a nightmare for me back then. Little do i know, I',, be using the info now that I'm working. What a fabulous explanation! I wish my first economics professor had explained this so well. Love the helpful examples, tables, and graphic. You rock!! Interesting hub and very well written. I thought this would go over the top of my head when I read the title as lindacee but you did make it easy to understand.

I learned something today! The title made me a bit tentative to dive in. I was a dismal failure in math did not take statistics and no economics courses either and thought it would be way over my head. I was pleasantly surprised to find it to be a good read and easy to comprehend. Well done. I just hope there's no test!

There was a time when the impression was that mathematics in economics terminates in statistics. But it became clear there are array of instances where calculus is used to explain economic principles.

As someone who's awfully bad at math, I have to admit I was somewhat discouraged to read this hub when I first saw the title! I'm glad I read it, though. Very well-written, interesting and much easier to follow than I thought it would be. Rated up! You've done an excellent job breaking down and explaining demand and supply into terms that are easy to understand. Interesting and useful. Economics - the dismal science! I love your explanation of how mathematics is an integral part of economics now, when it wasn't really included in 19th century writings.

Mathematics plays the primary role in many sciences physics, chemistry, etc. Marine Biology. Electrical Engineering. Computer Science. Medical Science. Writing Tutorials. Performing Arts. Visual Arts. Student Life. Vocational Training. Standardized Tests. Online Learning. Social Sciences. Legal Studies.