Comments on: Discussing ERA on the FOMC

By: JC

JC — Fri, 04 Nov 2005 15:50:52 +0000

The trouble with this is that economists are invariably right only in hindsight.

You do realize that I am an economist, right? That’s quite a stick of dynamite you just dropped. I hope it was unintentional, because you didn’t make much of an argument to back it up. I believe you are mistaken about the discipline, working off a common misconception of what economists do and economic methods.

That statement is false, particularly when the word “only” is included. Certainly, economists do sometimes make predictions that are false. And the macroeconomy is complex and difficult to predict. However, if the government decides to cut the money supply in half tomorrow, I think I can predict pretty accurately that nothing good will come of this.

Economists are certainly not false more than any other human making predictions. And I have confidence in the predictions we do make more than in any other social science, which is why I was attracted to the discipline. Economists judge theory based on the accuracy of predictions (at least positivist economists do), which is why they often advance the development of predicting techniques as well as economic knowledge. If it were not for the empirical rigor and the scientific method pushed by economics, many fields outside traditional economics (such as political science and law) would remain in a stagnant pool of intellectual goo.

By: Chris

Chris — Fri, 04 Nov 2005 15:27:33 +0000

The trouble with this is that economists are invariably right only in hindsight. They are terrible at making accurate predictions about future economic events. The reason for this is that the economy is unimaginably complex. What usually happens is that some disaster or suprisingly positive event occurs and then after the fact the economists explain it. Let us hope that sabermetricians have better predictive capacity than the economists–although few would have predicted the White Sox would win it at the beginning of the year.

By: Peter

Peter — Thu, 03 Nov 2005 18:48:43 +0000

It’s no coincidence that Michael Lewis, the ballyhooed author of Moneyball, has written several books on business/Wall Street.

It’s odd that many baseball fans instinctively grasp statistical theory when it comes to baseball (park adjusted statistics, OPS, etc) but shy away from economics or the politics behind economics.

I’m guilty of it myself. You wonder why people can apply their brains to a game but not to real life.