{"id":24982,"date":"2017-08-29T13:32:50","date_gmt":"2017-08-29T18:32:50","guid":{"rendered":"http:\/\/olduvai.ca\/?p=24982"},"modified":"2017-08-29T13:33:17","modified_gmt":"2017-08-29T18:33:17","slug":"economists-are-the-new-astrologers","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=24982","title":{"rendered":"Economists Are the New Astrologers"},"content":{"rendered":"

Economists Are the New Astrologers<\/a>\"astrology.PNG\"<\/h3>\n
When Christopher Nolan was promoting his previous film Interstellar<\/em>, he made the casual observation<\/a> that \u201cTake a field like economics for example. [Unlike physics] you have real material things and it can\u2019t predict anything. It\u2019s always wrong.\u201d There is a lot more truth in that statement than most academic economists would like to admit.<\/div>\n
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Alan Jay Levinovitz recently put forth the provocative argument that economics is \u201cThe New Astrology.\u201d<\/a> He notes that \u201csurveys indicate that economists see their discipline as \u2018the most scientific of the social sciences.\u2019\u201d But unfortunately \u201creal-world history tells a different story, of mathematical models masquerading as science and a public eager to buy them, mistaking elegant equations for empirical accuracy.\u201d<\/p>\n

Indeed, Levinovitz goes on to observe that,<\/p>\n

The failure of the field to predict the 2008 crisis has also been well-documented. In 2003, for example, only five years before the Great Recession, the Nobel Laureate Robert E Lucas Jr told the American Economic Association that \u2018macroeconomics … has succeeded: its central problem of depression prevention has been solved\u2019. Short-term predictions fair little better \u2014 in April 2014, for instance, a survey of 67 economists yielded 100 per cent consensus: interest rates would rise over the next six months. Instead, they fell. A lot.<\/p><\/blockquote>\n

There are, of course, many other examples of the failure of mathematical models in economics. The model Christina Romer put together during the height of the Great Recession concluded that unemployment could go as high as 8.8 percent without<\/em> the economic stimulus bill. With the stimulus, unemployment went over 10 percent<\/a>. The spectacular failure of Long Term Capital Management<\/a>, which was built solely upon investing on mathematical models, is another great example.<\/p>\n

…click on the above link to read the rest of the article…<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

Economists Are the New Astrologers When Christopher Nolan was promoting his previous film Interstellar, he made the casual observation that \u201cTake a field like economics for example. [Unlike physics] you have real material things and it can\u2019t predict anything. It\u2019s always wrong.\u201d There is a lot more truth in that statement than most academic economists […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[15760,15761,2085,7617,10693],"class_list":["post-24982","post","type-post","status-publish","format-standard","hentry","category-economics","tag-andrew-syrios","tag-astrology","tag-economists","tag-mises-institute","tag-prediction"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/24982","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=24982"}],"version-history":[{"count":2,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/24982\/revisions"}],"predecessor-version":[{"id":24984,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/24982\/revisions\/24984"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=24982"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=24982"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=24982"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}