Econometrics and Management Science: Their Overlap and Interaction

Abstract

This is an expository article on the relationship of econometrics and management science. After some general observations it considers a number of applications, such as prediction on the basis of input-output models and of econometric macromodels and decision-making based on linear decision rules. These rules are applied to cost minimization in a factory and welfare maximization for a country as a whole. In the last part of the paper some attention is paid to uncertainty problems with respect to the constraints subject to which maximization or minimization takes place.

Reprinted by permission, “Econometrics and Management Science: Their Overlap and Interaction”, H. Theil, Management Science, 11, (1965,) Series B, B200–B212. Copyright 1965, The Institute of Management Sciences, 290 Westminster Street, Providence, RI 02903. Received October 1964. Invited address to the Joint Meeting of TIMS and the Econometric Society at Zurich, Switzerland on September 9, 1964. Sponsored by The Institute of Management Sciences and affiliated with the Econometric Institute of the Netherlands School of Economics.