Who said economics is about forecasting the future?

Gideon Rachman of the FT wants to dethrone economists. I am all for it, but what grates in his article is the view that economics as a science is defined by its ability to forecast the future. No, it is not, and whoever said that is not very knowledgeable about economics as a discipline.

Well, except that Rachman takes his definition from … Joe Stiglitz! 

I am sure Stiglitz would recant, or at least argue that his comment was taken out of context, upon close examination.  At best, economics can help us make contingent predictions -- a long way off from forecasting.

There is plenty wrong with the way that economists have behaved in the run-up to the financial crisis without ascribing such grandiose claims to economics. 

My take is that you should blame economists, not economics:      

The problem is that economists (and those who listen to them) became over-confident in their preferred models of the moment: markets are efficient, financial innovation transfers risk to those best able to bear it, self-regulation works best, and government intervention is ineffective and harmful.

They forgot that there were many other models that led in radically different directions. Hubris creates blind spots. If anything needs fixing, it is the sociology of the profession. The textbooks -- at least those used in advanced courses -- are fine.

Non-economists tend to think of economics as a discipline that idolizes markets and a narrow concept of (allocative) efficiency. If the only economics course you take is the typical introductory survey, or if you are a journalist asking an economist for a quick opinion on a policy issue, that is indeed what you will encounter. But take a few more economics courses, or spend some time in advanced seminar rooms, and you will get a different picture.

Labor economists focus not only on how trade unions can distort markets, but also how, under certain conditions, they can enhance productivity. Trade economists study the implications of globalization on inequality within and across countries. Finance theorists have written reams on the consequences of the failure of the “efficient markets” hypothesis. Open-economy macroeconomists examine the instabilities of international finance. Advanced training in economics requires learning about market failures in detail, and about the myriad ways in which governments can help markets work better.

Macroeconomics may be the only applied field within economics in which more training puts greater distance between the specialist and the real world, owing to its reliance on highly unrealistic models that sacrifice relevance to technical rigor. Sadly, in view of today’s needs, macroeconomists have made little progress on policy since John Maynard Keynes explained how economies could get stuck in unemployment due to deficient aggregate demand. Some, like Brad DeLong and Paul Krugman, would say that the field has actually regressed.

Economics is really a toolkit with multiple models – each a different, stylized representation of some aspect of reality. One’s skill as an economist depends on the ability to pick and choose the right model for the situation.

Economics’ richness has not been reflected in public debate because economists have taken far too much license. Instead of presenting menus of options and listing the relevant trade-offs – which is what economics is about – economists have too often conveyed their own social and political preferences. Instead of being analysts, they have been ideologues, favoring one set of social arrangements over others.

Furthermore, economists have been reluctant to share their intellectual doubts with the public, lest they “empower the barbarians.” No economist can be entirely sure that his preferred model is correct. But when he and others advocate it to the exclusion of alternatives, they end up communicating a vastly exaggerated degree of confidence about what course of action is required.

Comments

[Matt]

You can also blame Nicholas Nassim Taleb for this confusion. In his world view, all economists have ever done is make predictions.

[PS Baker]

But if Economics aspires to be a science, it has to make predictions that are useful. This is what science does: if you are unwell and you go to the doctor, he will use science to tell you what is wrong and what will happen to you. Mostly he will be correct because everything he tells you is based on rigorous science.

Economics can't do that, so it's not a science. It only tells you, post hoc, why something happened, which of the theories was correct.

[skf bearing]

Today, not only Turkey but many developing countries are struggling to support their poorer citizens' access to health care.

[ball bearings]

Mostly he will be correct because everything he tells you is based on rigorous science.

[Jurriaan Bendien]

The point is not to abandon economics but to INTEGRATE history and
economics. Very serious analytical problems are created due to the failure
of economists to understand historical contexts properly and the failure of
historians to understand the powerful influence of economic considerations
in human affairs. Sadly, economic history is a dwindling science, while it
offers so many crucial relativisations.

More profoundly, though, the inability to integrate economics and history is
due to a set of axioms which are never questioned, because they are central
to the ideological beliefs and values of the business class.

This axioms include, among many others:

1) Value is created by trade.
2) Free markets tend towards the creation of economic equilibrium.
3) Private ownership always produces the most optimal allocation of
resources.
4) Competition is fair if all have the opportunity to participate in
markets.

etc.

The historian could be considered to be primarily concerned with what
happened in the past and its meaning in the present. The economist could be
considered to be primarily concerned with the meaning of the present for the
future. Yet "History" in general cannot be simply defined as "the past",
because it is also "the past living in the present" and "the future living in the present".

[ugg outlet]

a story

[best gps review]

i was looking the same but there was not any proper resourc!

[Michael]

If economics cannot make even bounded predictions about the future, then it is not a science.

That's what a science is. Among other things, it is a discipline which creates testable predictions.

I mean, I'm pretty down with the idea that economics as currently practiced is not a science. But there is definitely a need for something which is like economics but is also a scientific discipline.

[Anais]

I agree but it will not stop Mr. Rodrik (or other economists) from accepting the Nobel Memorial Prize in Economic Sciences. I am not sure why the term 'Sciences' is needed. In any case, there is already a prize for literature.

Science, as I understand it, involves both explanation and prediction. At best economics provides ex-post explanations and even here there is very little agreement.

With reference to the comment on history by Bendien, it is convenient to divorce history from economics. It allows 'Economic Scientists' to view the market as a natural system subject to natural laws (see http://www.edge.org/3rd_culture/rushkoff09/rushkoff09_index.html). Conveniently, there were no politics in the creation of the system.

[escalante blogger]

That's the opinion by most economists.

[Jan Wiklund]

"Non-economists tend to think of economics as a discipline that idolizes markets and a narrow concept of (allocative) efficiency. If the only economics course you take is the typical introductory survey, or if you are a journalist asking an economist for a quick opinion on a policy issue, that is indeed what you will encounter."

Well, that is a serious problem with economics as a science. An introductory course, or a quick answer from a practiser, shouldn't be that flawed. If it couldn't whow you the whole picture, it should at least tell you it wasn't the whole picture.

[air max 2009]

Ola Eterna e doce Flor: Porque eu fico triste por ler a tua poesia, achei linda mas ao mesmo tempo um pouco triste, Sei o que vai na tua alma, mas minha doce flor, a vida tem destas coisas, olhaste para o Céu e viste a estrela encandecente essa estrelinha é a tua guia Deus não nos abandona, mas tambem não faz as coisas como nós queremos, mas sim como Ele acha que deve ser.
Beijinhos Doces no teu doce Coração.
Santa Cruz

[Shoulder bags]

Trend Alert! Beyoncé in http://www.bagsok.com/Shoulder How to Look Great With Right http://www.bagsok.com/Cross-body_bags in for Fall 2010 Cast a Glance at Most Awesome http://www.bagsok.com/Shoulder for Fairy

[weddingdresses]

The first stage Wedding Dresses of spring wedding will give you so many things to plan and organize. Taking some time first to think and jot down some initial wedding ideas or Evening Gowns themes is really important before referring to any wedding vendors or Evening Dresses
venues. In this way, you will be able to easily conceptualize the perfect touches Quinceanera Dresses for your spring wedding day.As we all know, spring is the mark of time of birth and renewal. Having your wedding in this beautiful season can bestow a marriage life full of excitement and adventure.

[weddingdresses]

The first stage Wedding Dresses of spring wedding will give you so many things to plan and organize. Taking some time first to think and jot down some initial wedding ideas or Evening Gowns themes is really important before referring to any wedding vendors or Evening Dresses
venues. In this way, you will be able to easily conceptualize the perfect touches Quinceanera Dresses for your spring wedding day.As we all know, spring is the mark of time of birth and renewal. Having your wedding in this beautiful season can bestow a marriage life full of excitement and adventure.

[Uygar Atalay]

Who said that? Not me. I am the one who said "economy as a scince is an oxymoron". "Renowned econmists" are the best marketers (of themselves). Being Jewish is not a prerequsite but never hurts.

**********
I cannot however give the same grade for your management of Sledgehammer Cetin propaganda campaign. I think the best strategy after this point is insanity defense. Further advice is available free of charge in this op-ed piece:

http://www.stargazete.com/acikgorus/darbeciler-icin-hz-isa-savunmasi-haber-228505.htm

[Microsoft Office 2010]

tks for your post,i will bookmark it,it's so great!i will share my feelings with you,tks

[cheapuggtallboots]

nice article.thx 4 sharing.

[kcl Technical Grade]

Local Line deals with various drilling chemicals, drilling weighing chemicals, emulsifiers, corrosion inhibitors, drilling mud deformers, Polymers, Bulk products etc.

[baseball hats]

A good website recommend to
you: http://www.newerahatstore.com , they sell New Era Hats, Monster Energy Hats,DcShoesHats,RedBullHats,baseball hats wholesale,NFL Hats And Famous Hats at cheap price.

Thanks for posting this. Very nice recap of some of the key points in my talk. I hope you and your readers find it useful! Thanks again

happy to share your blog!
good article!
may all your plan can come true

Website: http:// www.newerahatstore.com

[wholesaledunk]

arn from the actual policies of successful emerging economies, focus on evaluation but not at the expense of the big quest

[cheap gucci]

this is such a good article to read. Stimulating me to read more of your articles. Keep up the good work Smile Hoping more excellent articles from you soon.

[china wholesale]

Great article written on my life, help, http://www.cmonc.com Thank you for your article, hope to become friends.

[moncler jackets]

An excellent blog!I like it.but The meaning of the last paragraph a bit puzzled.It’s always good to have passions in life to keep yourself from going down the negative path and work towards staying positive.I really enjoyed this. You can look your article comments. This information has really been helpful for most of the readers. I really appreciate the way you have written about this. I will really like to read more on this from you. I know your expertise on this. I must say we should have an online discussion on this. Writing only comments will close the discussion straight away! And will restrict the benefits from this information.http://www.monclerlife.com

[bad credit student loans]

not only Turkey but many developing countries are struggling to support their poorer citizens' access to health care

[disaster recovery]

avoiding driving off potential international investors worried about the de-valuing of their investments?

[moncler jackets]

Well, except that Rachman takes his definition from … Joe Stiglitz!

[Moncler jackets]

Buy true religion jeans online The train is comfortable.

If you can make it here, you can make it anywhere. Coach handbags on sale People have been playing the blues for many years , but the music has kept many of its characteristics. The train is comfortable.

[pellet mill site]

Thanks for posting this. Very nice recap of some of the key points in my talk. I hope you and your readers find it useful! Thanks again

happy to share your blog!
good article!
may all your plan can come true

[cheap moncler coat]

Austin Collies injury which was dreaded to be an extremely moncler jackets online serious one is reported to be just a concussion as said by his coach Jim Caldwell. Collie was reported to be sitting up and alert cheap moncler coat in the locker room as told by Jim to Kevin Lee.However, though a moncler jackets concussion is not at all a minor injury but still everyone seems to be relieved threats of moncler jacket sale a possible paralysis can now be dismissed. Collie’s injury seemed to be the most moncler coats sale severe any player has had this year in the NFL.Kurt Coleman has cheap moncler women coats already been flagged for his rough helmet to helmet challenge on Collie which was moncler coats deemed unnecessary. The league officials have also supported the call, but still a defence against Coleman is being men moncler coats made on Twitter as many feel the tackle was a clean and legal one. Ryan Clark from the Steelers is also one of them who are supporting Coleman. Football moncler men jackets is considered to be a violent game and so such tackles should not be overruled from the game which has made the game so moncler jacket outlet popular in the country. http://www.cheapmonclerjacketsale.com

[air water heat pump]

if you are unwell and you go to the doctor, he will use science to tell you what is wrong and what will happen to you. Mostly he will be correct because everything he tells you is based on rigorous science.

[Coach Wallets]

The innovative design with super quality and shinny colors with different styles make clearance Coach Wallets on sale at coachoutletvip.com become one of the most popular brand wallets all over the world, content with coach mens wallet cheap on sale and discount coach purses for women. With help of multilayers inside design from cheap coach wallets outlet for sale, you can collect different kinds of cards and put money inside that you want to. I'm sure you'll find what you want among the great amount of clearance coach purses on sale here. Welcome to coach online store and buy them now. Enjoy the fashion world now.

[Coach Wallets]

The innovative design with super quality and shinny colors with different styles make clearance Coach Wallets on sale at coachoutletvip.com become one of the most popular brand wallets all over the world, content with coach mens wallet cheap on sale and discount coach purses for women. With help of multilayers inside design from cheap coach wallets outlet for sale, you can collect different kinds of cards and put money inside that you want to. I'm sure you'll find what you want among the great amount of clearance coach purses on sale here. Welcome to coach online store and buy them now. Enjoy the fashion world now.

[classic short ugg]

Thanks so much for this. I thought I found loads of great stuff here yesterday after spending all day going through this private area.

[monclerlife]

French unions 23 launched a nationwide strike in the second month, Moncler jackets 290 million people took to the streets to protest against the government intends to push the retirement system reform. Because of air moncler coats transport operators are also involved in Paris Charles DE gaulle airport, moncler sale estimation and ollie airport yesterday 40% and 50% of the flights are cancelled, other airport also can maintain 60% flights. Moncler Union estimated 2.5 million in December 7, is expected to strike the number 23 strike than last time, France has a protest rally, traffic 231, more than half the train service, Moncler jackets sale but the connection of Britain and France eurostar service, maintain the normal. The BBC reports, the big strike over to Paris public transportation. Paris metro line, there are 16 during the morning go to work in the 23rd, Moncler jackets Men Paris metro only five runs normally. From the game, inter are not a real sense of team. It is udinese performed very well in the match, the winner of the grand slam season, to make a lot of trouble, let the nerazzurri defence under moncler coats test. Udinese’s biggest mistake is not to grasp the opportunities created itself. Regardless of how the game, because it was the first home game of the season, the inter fans to Spanish benitez says a maximum support. The huge banners north bank is Spanish. moncler jackets women black Many people still remember, it is with rafa benitez at Liverpool in Istanbul was reversed the AC milan.

[yiwu market]

Thanks for your content and I will go back again soon because this place is so interesting .

[modern oil paintings]

Well said, such a person should be a good sentence, or the future will be more rampant.will be happy to be proved wrong with this I have to admit to a raised eyebrow with this as well.

[monclerlife]

September 1991 25 Japanese Supreme Court today rejected rock hand county council, Moncler jackets county authorities, especially GeLiao government appeal verdict formal visits to the yasukuni shrine violates the moncler coats 2010 constitution. Japan’s Supreme Court decision to confirm the higher court sendai 10th January 1991 regarding visits to the yasukuni shrine violates the constitution. moncler sale High court of rock sendai hand county residents of the yasukuni shrine litigation trial. Action that rock hand county council in 1979 to achieve the requirements as the emperor, Moncler the prime minister official visits to the yasukuni shrine’s resolution and speaker, county aid in 1981 as 35 people pay visits to the yasukuni shrine at public expense of incense money violates the constitution about the principle of separation of and requirements of more than 20,000 yen to recover the temple.for money. Moncler jackets sale The trial, the higher court that sendai formal visits to the outlet moncler shrine on purpose in religious significance, should say with particular religious care to arouse the behavior, Moncler jackets Men belong to the con-stitution forbids religious behavior. The money paid as incense beneath the rock pursuit separation principle of neutrality hand county authorities. moncler jackets women Carlo ancelotti has confirmed, terry told me he had outlet moncler problems, hope can be ruled out. I take the anelka was suspended for drogba, so he will play on Wednesday. moncler jackets women black We hope that John terry and frank lampard could even pay, but I think they must be able to train well before.

[oem usb]

[url=http://www.usb-disk.com]wholesale flash drives [/url]weche zkthug et ben95 sa tourne jusqua bordeaux walah les frere vous nikez tou yes we can elle est barbare gonesse gang aiii enfait gonesse c la ville ou la cité ??
[url=http://www.onlineusb.net]wholesale usb [/url]
[url=http://www.topusbdrive.com]wholesale usb [/url]

[Stciker Printing]

The clearness in your post is simply spectacular and i can assume you are an expert on this subject. I will grap each and every information and refer to my friends also.

[Account Deleted]

Thank you for this information.On white iPhone 4 navigation you have given useful knowledge keep it up.:)

[Account Deleted]

raf

Thanks a lot for sharing.

[Account Deleted]

am sure Stiglitz would recant, or at least argue that his comment was taken out of context, upon close examination. At best, economics can help us make contingent predictions -- a long way off from forecasting.

There is plenty wrong with the way that economists have behaved in the run-up to the financial crisis without ascribing such grandiose claims to economics.

http://www.mbtfootwearusa.com/

[Account Deleted]

Wholesale Beads Economics is really a toolkit with multiple models – each a different, stylized representation of some aspect of reality.

[Account Deleted]

Thanks for sharing this kind of stuff with us.. each line is full of info

efx bracelet

[Account Deleted]

Visvim Serra Shoesfrom the regular tribes of Amazon

[Adrian Jones]

Nice! I really enjoyed reading your post. Thanks for sharing and keep up the good work.

call Ireland

[Account Deleted]

Many places and centers offer business and trade promotions to both buyers and supplier.What about the differences in skill intensities across industries? The job losses in the relatively unskilled-labor intensive battery industry should have little effect on the relatively skilled-labor intensive machinery
sexshop
sexyshop
sexshop online
alongador peniano

[Account Deleted]

organic seo service
Thanks for the informative writing. Would mind updating some good tips about it. I still wait your next place. ;)

[Account Deleted]

I'm impressed about your article regarding the economists ;)Fenerya bani online fara investitie Tudy

[Account Deleted]

Only great minds can afford a simple style.
Moncler

[Lifenzhu]

Rosetta Stone Language
According to comScore only eleven percent of Twitter's users are aged twelve to seventeen.

[Account Deleted]

organic vitamins
I can not stop reading this. And 'so fresh, so full of information,
I do not know. I'm glad that people actually write the smart way to
show the different sides of him.
organic vitamins

[orjin krem]

I've also learned that there's a new kid on the block that sounds just like my eldest son because just yesterday he was screaming his lungs Elektrikli Ev Aletleri ütüler Ev Mutfak Malzemeleri blender mutfak robotu mikser kıyma makinesi doğrayıcı rondo fritöz parfüm markaları

[Account Deleted]

recover powerpoint file

Good Post.It's really helpful & interesting

[bayahmet]

I wish you a great success thanks sharing
ım fun ;)