WHY MATRICS IS IMPORTANT IN ECONOMICS

History of the Matrix

The matrix has a long history of application in solving linear equations. They were known as arrays until the $1800$‘s.  The term “matrix” (Latin for “womb”, derived from mater—mother) was coined by James Joseph Sylvester in $1850$, who understood a matrix as an object giving rise to a number of determinants today called minors, that is to say, determinants of smaller matrices that are derived from the original one by removing columns and rows.  An English mathematician named Cullis was the first to use modern bracket notation for matrices in $1913$ and he simultaneously demonstrated the first significant use of the notation $A=a_{i,j}$ to represent a matrix where $a_{i,j}$ refers to the element found in the ith row and the jth column.  Matrices can be used to compactly write and work with multiple linear equations, referred to as a system of linear equations, simultaneously. Matrices and matrix multiplication reveal their essential features when related to linear transformations, also known as linear maps.

Matricx is important in solving many problems. I don't want to explain matrices in detail, but I am going to explain why matrices are important in economics or where matrices are applicable in economics.

Large amount of data is required in economics to be computed. For example to calculate GDP of India we will have huge amount of data which is included in corporate income from an individual income. So it needs a systematic storage to keep all the data without any hassle and to calculate the data correctly. It is impossible to calculate the real GDP of a country with a human brain. So for fast and accurate calculation the computerised matrices become important.

• Matrix algebra has several uses in economics as well as other fields of study. One important application of Matrices is that it enables us to handle a large system of equations. It also allows us to test for the existence of a solution to a system of equations even before we attempt solving them. 

 

• Most data in economics are discrete and two-dimensional. Matrices is one very natural way to express such data. And since mathematical theories in matrices are well-established, all the results from maths can be readily used for economists.

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