Hey Hussein,

Yes it can be applied to a real and practical example. But keep in mind, this is a mental model to help you understand and in turn achieve the goal/function of systemizing.

For example, you can use the 7 steps like this (rough notes):

Step 0: Real estate market-- specifically apartments

Step 1: Predict price of an apartment unit

Step 2: understanding is limited by what I can observe on a Property Finder site

Step 3: unit, property, area, price, features (like: # bedrooms, #bathrooms, swimming pool, etc.), location, owner, buyer, seller, etc.

Step 4: Economic system approach

Step 5: Take only the parts consistent with the approach; ie. unit, property, area, price, features (like: # bedrooms, #bathrooms, swimming pool, etc.), location

Step 6: hedonic regression/hedonic demand theory is selected as the methodology (laws between the interacting parts are built accordingly eg. features, area, and location reflect the price of a unit in a property)

Step 7: if it works sufficiently well (and makes sense intuitively/statistically etc.) then it can be understood and therefore the system is valid.

Of course, at the end of the day this is a rough note of the mental systems thinking for this specific entity that I chose. You can apply it to any real and practical example you choose; in a different manner-- hope this helped!

An aspiring quant & writer at : www.ghannami.com

An aspiring quant & writer at : www.ghannami.com