Sample Models

Model 4.14: ANP BOCR - How do you fix the economy? (2012)

Short Description

The purpose of this model was to answer the question, how do you fix the economy? To begin, with we identified the criteria that would be used to make our decision. The majority of these criteria come directly from our presidential candidates’ (President Obama and Governor Romney) campaign platforms. Additional resources for obtaining and comparing criteria were The Economist magazine, conversations with professors of economics at the Katz Graduate School of Business, and personal thoughts/beliefs.

Once criteria were identified, we constructed and synthesized a model, using the Super Decisions software. By using Super Decisions, we were able to assign objective values to subjective measures. Who is able to solve such a complex problem without the assistance of such complex decision making software, like Super Decisions? So far, the answer is no one, as the economy continues to underperform. In fact, median incomes are down by 4.6% since mid-20091.

With the model constructed and pairwise comparisons completed, we were ready to synthesize the model to obtain results. Our alternative actions were: to maintain the status quo (do nothing, and allow the economy to self-correct), increase regulation by the federal government, and to decrease the amount of regulation by the federal government.

The overall outcome of the model is a recommendation for the federal government to decrease the amount of regulation. If we consider the economic principles being discussed, this makes perfect sense. First, by decreasing the amount of regulation, we are allowing consumers to have more control over their spending and the subsequent cash flows through the free market. Additionally, by reducing the tax rates, both federal and corporate, the government will allow for higher income rates, which in turn should lead to an increase in spending (assuming that the majority of goods are normal). The overall results of our model are shown below. Interpreting the results yields that a decrease to regulation is preferred to either an increase in regulation or maintaining the status quo (doing nothing).

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