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Economists are as effective as astrologists at predicting the future. For some reason otherwise smart people don't realize this? I think it's something about ec

by Guzba 6y ago

Economists are as effective as astrologists at predicting the future. For some reason otherwise smart people don't realize this? I think it's something about economists being associated with the university system. I see this assured economic doom repeated so much without being questioned as anything but guaranteed I wonder where this incredible confidence is coming from? We have literally no idea what 2021 holds for us, in the same way we had no idea 2020 would be so uh unique.

danans 6y ago
> Economists are as effective as astrologists at predicting the future. Yes, but a survey of economists or astrologers predictions it's still probably better than the survey of randomly chosen people, if for another reason then both of them are in the business of surveying your broad range of signals from a broad range of people to inform their predictions. Any individual is capable of being wildly wrong in their predictions regardless of their title.
maccam912 6y ago
When it's a survey of many economists I tend to put stock in what comes out. In this case if 80% say there is a 25% chance of a second dip, thats a much more informed opinion than I could ever have on the subject. I now know it isn't likely so don't plan my life around waiting for the second dip, but also don't be too surprised if we do see a second dip.
- nordsieck 6y ago
  > When it's a survey of many economists I tend to put stock in what comes out. In this case if 80% say there is a 25% chance of a second dip, thats a much more informed opinion than I could ever have on the subject. Who do you think has a higher chance of being right: * macroeconomists when predicting the future of the economy * fund managers when predicting the future of stocks Just because people are smart or know a lot of things doesn't mean that that knowledge translates into useful ability.
  - dwheeler 6y ago
    > Economists are as effective as astrologists at predicting the future. That's unfair to astrologists, economists are not going to be that good. :-) To be fair, the better economists work by creating models based on reality. But we don't have a rich dataset about modern economies responding to pandemics. It's not that they are stupid, it's that economies are difficult to predict in general, and we don't have the data sets to give any confidence for this case.
    - rch 6y ago
      I don't think the term "economists" refers to an easily generalizable group. In my experience there is more world-view variation among economists than one might expect looking at the differences between bayesians vs. frequentists, etc. Some economists don't embrace modeling as a means of arriving at policy recommendations at all, for instance. Others do of course, but influence doesn't seem as tied to quantitative assessments as other fields.
      - dwheeler 6y ago
        It's true that some use quantitative models, and some don't. But all experts use past experience as a guide. As the present becomes more different from the past, it becomes more uncertain that past experience is relevant.
- nradov 6y ago
  How accurate were those same economists with their previous predictions? Were they more accurate than random people off the street?
  - pm90 6y ago
    Yes, they’re more accurate than random noise. Unfortunately like with any science which seems impactful on people’s lives, there is a lot of drama around people who try to become famous by making predictions and then failing. But the science itself is on firm ground.
    - nradov 6y ago
      Do you have actual data on prediction accuracy for economists versus non-economists? I'd be interested to read the research.
Afforess 6y ago
>Economists are as effective as astrologists at predicting the future. [citation needed] >I see this assured economic doom repeated so much without being questioned as anything but guaranteed I wonder where this incredible confidence is coming from? All the stock market gains are from big tech. Any other markets are flat or down. ( https://finviz.com/map.ashx?t=sec&st=ytd https://finviz.com/map.ashx?t=sec&st=ytd )
- Guzba 6y ago
  Quick Google search, nearly top result. Committing the sin of just reading the headline but man this is not hard to find evidence: https://www.bloomberg.com/news/articles/2019-03-28/economists-are-actually-terrible-at-forecasting-recessions https://www.bloomberg.com/news/articles/2019-03-28/economist... Or maybe? https://fivethirtyeight.com/features/economists-are-bad-at-predicting-recessions/ https://fivethirtyeight.com/features/economists-are-bad-at-p... "All of the gains are from big tech". All of the gains are always from some companies and all of the losses are always from others. This is just how the pie got sliced 2020. I don't think it has any special meaning we can divine from it?
  - Fellshard 6y ago
    Economics isn't a sliced pie like that.
    - Guzba 6y ago
      I just used that as an expression, no special meaning intended.
  - tylerhou 6y ago
    (2013) https://www.cbsnews.com/news/stock-market-gains-come-from-few-top-performers/ https://www.cbsnews.com/news/stock-market-gains-come-from-fe...
  - victorfriedrich 6y ago
    The market cap of the five largest companies as share of the S&P 500 hasn't been higher in more than four decades.[1] The way the pie is sliced currently isn't really an indicator of stability. [1]: https://www.isabelnet.com/wp-content/uploads/2020/08/Market-Capitalization-of-Largest-Companies-as-Share-of-SP-500-Total.jpg https://www.isabelnet.com/wp-content/uploads/2020/08/Market-...
superhuzza 6y ago
𝙴̶𝚌̶𝚘̶𝚗̶𝚘̶𝚖̶𝚒̶𝚜̶𝚝̶𝚜̶ People are as effective as astrologists at predicting the future. I don't know if there's any groups that can make broad, societal predictions - the only predictions you can trust tend to be incredibly specific.
ffggvv 6y ago
i agree. it would be interesting to see a historical version of this poll and see how accurate they’ve been in the past. if economists were so great at predicting the economy they’d all be rich
AznHisoka 6y ago
>> Economists are as effective as astrologists at predicting the future. Well, it doesn't help that they don't have control over external factors. Like the Fed reducing interest rates to 0, and buying corporate bonds. Very hard to predict something when there's no free market where things just play out with no external influence.
- luckylion 6y ago
  On the other hand, they are predicting the Fed's actions, that's always a significant part of the models, and the Fed and the government etc aren't random actors, they are somewhat predictable (and stability is their goal which helps in that regard). But they aren't really the market makers by themselves, so even if you get those predictions right, you might still be far away from being correct.
icedchai 6y ago
They're pointing out the obvious. Do you think tons of people are going to start dining out again? Going to gyms? Going to the movies? Large parts of the economy will be soft for years. Much of it will never come back due to semi-permanent shifts in behavior.
- SpicyLemonZest 6y ago
  I do. In many areas people are already doing those things.
  - icedchai 6y ago
    But how many? Probably not the same percentage is before COVID. There will, of course, be activity. It just won't be the same as before.
    - SpicyLemonZest 6y ago
      I think it'll be close to the same percentage, but I don't really know how to substantiate that either way.
- nonford150 6y ago
  And maybe we'll start to realize our 'robust' economy was based on so many frivolous activities instead of durable manufacturing and private home ownership.
  - icedchai 6y ago
    People are going to realize how much of their spending was unnecessary. For example, did I really need to be going to coffee shops 5x or 6x a week? Dining out every other meal? It's healthier for me and my wallet to make this lifestyle change... covid accelerated it. I should've done it anyway.
  - nradov 6y ago
    It's the frivolous activities that make life worth living.
lukifer 6y ago
From Philip Tetlock's Superforecasting [0] to Robin Hanson's Futarchy [1], there's a strong argument that predictions are entirely valueless without "skin in the game", be it in reputation score, or dollars. [0] https://en.wikipedia.org/wiki/Superforecasting:_The_Art_and_Science_of_Prediction https://en.wikipedia.org/wiki/Superforecasting:_The_Art_and_... [1] http://mason.gmu.edu/~rhanson/futarchy.html http://mason.gmu.edu/~rhanson/futarchy.html
hirundo 6y ago
> Economists are as effective as astrologists at predicting the future. That's not fair. Paul Krugman has predicted seven of the last three recessions.
- TheCowboy 6y ago
  There was a study comparing the accuracy of predictions made by pundits, and Krugman came out as one of the best.
  - TheCowboy 6y ago
    Here is the data if you want to judge for yourself: https://www.hamilton.edu/news/polls/pundit https://www.hamilton.edu/news/polls/pundit
yummypaint 6y ago
Economics is much worse than other disciplines as far as endemic conflicts of interest. The problem has more to do with companies writing up claims that serve their interests and getting economists to rubber stamp them without disclosures. Economists were hotly debating among themselves whether to adopt any kind of code of ethics less than 10 years ago. The insularity of other academic fields has its drawbacks, but the kind of behavior economists have broadly engaged in is much more representative of the business world than academia, and a result of their close ties to those interests.
just-juan-post 6y ago
I would suggest you pay attention to the economic stories and not the human interest stories when it comes to this virus. Did you know that 50% of San Fransisco's stores have closed? Half. HALF. https://www.sfgate.com/business/article/Half-of-all-San-Francisco-storefronts-have-closed-15513726.php https://www.sfgate.com/business/article/Half-of-all-San-Fran... Did you know 250,000 evictions are looming in Las Vegas alone? https://www.ktnv.com/news/coronavirus/las-vegas-could-face-eviction-crisis-amid-pandemic https://www.ktnv.com/news/coronavirus/las-vegas-could-face-e... These are very real threats - not some fun internet discussion about inflation or gold or bitcoin. Your poo-poo'ing of economists is very out of context in this case. The evidence is right in front of your face and you can find it on Google News.
- toinetoine 6y ago
  Las Vegas, a town where the majority people are employed in the hospitality/leisure industry (casinos, restaurants, convention prep, etc.) SF where a huge amount of the residents have left the city since a majority of the white collar employees are WFH for the foreseeable future. Not sure how you can take these places and extrapolate for the economic health of the entire country...
  - nkozyra 6y ago
    You can special case any city or town. I don't think WFH is endemic to SF, for example. And economic effects cascade down.
    - iso1631 6y ago
      > I don't think WFH is endemic to SF, for example Certainly not. I don't think it's bad either, but some people (owners of expensive offices) do. https://www.bbc.co.uk/news/business-53925917 https://www.bbc.co.uk/news/business-53925917 -- Warnings of 'ghost towns' if staff do not return to the office As to shareholders of chain coffee/lunch stores -- https://www.bbc.co.uk/news/business-53939526 https://www.bbc.co.uk/news/business-53939526
EasyTiger_ 6y ago
I’ve seen impending economic doom being pushed on HN since 2016
- disgruntledphd2 6y ago
  To be fair, the insanity of both the stock and bond markets started becoming really apparent around then. Still hasn't gotten any more sane, unfortunately.
  - lostmsu 6y ago
    Or maybe it is perfectly sane, and you just don't understand mechanisms at play?
    - disgruntledphd2 6y ago
      In so far as the stock market is supposed to reflect the real economy, it's entirely insane. Bonds are being sold that pay less money back than their sticker price. The equivalent is the bank charging you 400k for a 500k mortgage. That's pretty insane. Stocks are apparently worth 30 years of their current profits, even for those stocks without a history of consistent profit (i.e. Tesla, Netflix etc). I understand that lots of this is happening because of incredibly low interest rates, but pointing out that this is crazy is a public service in these ridiculous times.
sb057 6y ago
There's a quote that I sadly can't find the origin of but goes a little like: >Carlyle called economics the "dismal science". He was half-correct; it is indeed dismal.
plazmatic 6y ago
Yeah, I know reality challenges your whole "MAGA" narrative, but the reality is the economy is a disaster. Keep lying to yourself by questioning the experts though, just like with climate change and all the other "MAGA" inconveniences. I'm sure you know better. ROFL.
Seasonwreckage 6y ago
I agree. If you check the consensus a fear years before the 2008 financial collapse, most economists were bullish.
duncanawoods 6y ago
I liked a quote I cannot find that referred to any study that has "schools of thought", like economics, as not studying reality but tribes at war seeking changes / power for ideological ends.
sharadov 6y ago
The numbers are already there, Yelp says 50% of restaurants have closed down permanently https://www.eater.com/2020/6/26/21304219/over-50-percent-of-yelp-restaurants-have-closed-permanently https://www.eater.com/2020/6/26/21304219/over-50-percent-of-... It's not some far fetched doomsday scenario, the stimulus has helped the US economy from completely crashing.
qppo 6y ago
Imagine if we could control the weather. Weatherman forecasts a hurricane, so weather control does what they can to get rid of it. Economics is like that. Economists predict horrible downturn. Economic policy makers do what they can to avoid or lessen its impact. For example, economists predicted that Boeing (among others) was going to need a massive bailout to survive. The Fed purchased a ton of corporate bonds with printed money to juice the bond market and allow Boeing and others to refinance their debt. Do we blame the weatherman for being wrong when steps were taken to change the forecast?
grafs50 6y ago
I have no idea how accurate economists tend to be at predicting the future of the economy. I think its fair to say that economics has done a fair job of coming up with tools to deal with economic issues as the come up, and even preventing a fair amount that we never are even aware of.

by Guzba 6y ago

danans 6y ago

> Economists are as effective as astrologists at predicting the future. Yes, but a survey of economists or astrologers predictions it's still probably better than the survey of randomly chosen people, if for another reason then both of them are in the business of surveying your broad range of signals from a broad range of people to inform their predictions. Any individual is capable of being wildly wrong in their predictions regardless of their title.

maccam912 6y ago

When it's a survey of many economists I tend to put stock in what comes out. In this case if 80% say there is a 25% chance of a second dip, thats a much more informed opinion than I could ever have on the subject. I now know it isn't likely so don't plan my life around waiting for the second dip, but also don't be too surprised if we do see a second dip.

nordsieck 6y ago
> When it's a survey of many economists I tend to put stock in what comes out. In this case if 80% say there is a 25% chance of a second dip, thats a much more informed opinion than I could ever have on the subject. Who do you think has a higher chance of being right: * macroeconomists when predicting the future of the economy * fund managers when predicting the future of stocks Just because people are smart or know a lot of things doesn't mean that that knowledge translates into useful ability.
- dwheeler 6y ago
  > Economists are as effective as astrologists at predicting the future. That's unfair to astrologists, economists are not going to be that good. :-) To be fair, the better economists work by creating models based on reality. But we don't have a rich dataset about modern economies responding to pandemics. It's not that they are stupid, it's that economies are difficult to predict in general, and we don't have the data sets to give any confidence for this case.
  - rch 6y ago
    I don't think the term "economists" refers to an easily generalizable group. In my experience there is more world-view variation among economists than one might expect looking at the differences between bayesians vs. frequentists, etc. Some economists don't embrace modeling as a means of arriving at policy recommendations at all, for instance. Others do of course, but influence doesn't seem as tied to quantitative assessments as other fields.
    - dwheeler 6y ago
      It's true that some use quantitative models, and some don't. But all experts use past experience as a guide. As the present becomes more different from the past, it becomes more uncertain that past experience is relevant.
nradov 6y ago
How accurate were those same economists with their previous predictions? Were they more accurate than random people off the street?
- pm90 6y ago
  Yes, they’re more accurate than random noise. Unfortunately like with any science which seems impactful on people’s lives, there is a lot of drama around people who try to become famous by making predictions and then failing. But the science itself is on firm ground.
  - nradov 6y ago
    Do you have actual data on prediction accuracy for economists versus non-economists? I'd be interested to read the research.

Afforess 6y ago

>Economists are as effective as astrologists at predicting the future. [citation needed] >I see this assured economic doom repeated so much without being questioned as anything but guaranteed I wonder where this incredible confidence is coming from? All the stock market gains are from big tech. Any other markets are flat or down. ( https://finviz.com/map.ashx?t=sec&st=ytd https://finviz.com/map.ashx?t=sec&st=ytd )

Guzba 6y ago
Quick Google search, nearly top result. Committing the sin of just reading the headline but man this is not hard to find evidence: https://www.bloomberg.com/news/articles/2019-03-28/economists-are-actually-terrible-at-forecasting-recessions https://www.bloomberg.com/news/articles/2019-03-28/economist... Or maybe? https://fivethirtyeight.com/features/economists-are-bad-at-predicting-recessions/ https://fivethirtyeight.com/features/economists-are-bad-at-p... "All of the gains are from big tech". All of the gains are always from some companies and all of the losses are always from others. This is just how the pie got sliced 2020. I don't think it has any special meaning we can divine from it?
- Fellshard 6y ago
  Economics isn't a sliced pie like that.
  - Guzba 6y ago
    I just used that as an expression, no special meaning intended.
- tylerhou 6y ago
  (2013) https://www.cbsnews.com/news/stock-market-gains-come-from-few-top-performers/ https://www.cbsnews.com/news/stock-market-gains-come-from-fe...
- victorfriedrich 6y ago
  The market cap of the five largest companies as share of the S&P 500 hasn't been higher in more than four decades.[1] The way the pie is sliced currently isn't really an indicator of stability. [1]: https://www.isabelnet.com/wp-content/uploads/2020/08/Market-Capitalization-of-Largest-Companies-as-Share-of-SP-500-Total.jpg https://www.isabelnet.com/wp-content/uploads/2020/08/Market-...

superhuzza 6y ago

𝙴̶𝚌̶𝚘̶𝚗̶𝚘̶𝚖̶𝚒̶𝚜̶𝚝̶𝚜̶ People are as effective as astrologists at predicting the future. I don't know if there's any groups that can make broad, societal predictions - the only predictions you can trust tend to be incredibly specific.

ffggvv 6y ago

i agree. it would be interesting to see a historical version of this poll and see how accurate they’ve been in the past. if economists were so great at predicting the economy they’d all be rich

AznHisoka 6y ago

>> Economists are as effective as astrologists at predicting the future. Well, it doesn't help that they don't have control over external factors. Like the Fed reducing interest rates to 0, and buying corporate bonds. Very hard to predict something when there's no free market where things just play out with no external influence.

luckylion 6y ago
On the other hand, they are predicting the Fed's actions, that's always a significant part of the models, and the Fed and the government etc aren't random actors, they are somewhat predictable (and stability is their goal which helps in that regard). But they aren't really the market makers by themselves, so even if you get those predictions right, you might still be far away from being correct.

icedchai 6y ago

They're pointing out the obvious. Do you think tons of people are going to start dining out again? Going to gyms? Going to the movies? Large parts of the economy will be soft for years. Much of it will never come back due to semi-permanent shifts in behavior.

SpicyLemonZest 6y ago
I do. In many areas people are already doing those things.
- icedchai 6y ago
  But how many? Probably not the same percentage is before COVID. There will, of course, be activity. It just won't be the same as before.
  - SpicyLemonZest 6y ago
    I think it'll be close to the same percentage, but I don't really know how to substantiate that either way.
nonford150 6y ago
And maybe we'll start to realize our 'robust' economy was based on so many frivolous activities instead of durable manufacturing and private home ownership.
- icedchai 6y ago
  People are going to realize how much of their spending was unnecessary. For example, did I really need to be going to coffee shops 5x or 6x a week? Dining out every other meal? It's healthier for me and my wallet to make this lifestyle change... covid accelerated it. I should've done it anyway.
- nradov 6y ago
  It's the frivolous activities that make life worth living.

lukifer 6y ago

From Philip Tetlock's Superforecasting [0] to Robin Hanson's Futarchy [1], there's a strong argument that predictions are entirely valueless without "skin in the game", be it in reputation score, or dollars. [0] https://en.wikipedia.org/wiki/Superforecasting:_The_Art_and_Science_of_Prediction https://en.wikipedia.org/wiki/Superforecasting:_The_Art_and_... [1] http://mason.gmu.edu/~rhanson/futarchy.html http://mason.gmu.edu/~rhanson/futarchy.html

hirundo 6y ago

> Economists are as effective as astrologists at predicting the future. That's not fair. Paul Krugman has predicted seven of the last three recessions.

TheCowboy 6y ago
There was a study comparing the accuracy of predictions made by pundits, and Krugman came out as one of the best.
- TheCowboy 6y ago
  Here is the data if you want to judge for yourself: https://www.hamilton.edu/news/polls/pundit https://www.hamilton.edu/news/polls/pundit

yummypaint 6y ago

Economics is much worse than other disciplines as far as endemic conflicts of interest. The problem has more to do with companies writing up claims that serve their interests and getting economists to rubber stamp them without disclosures. Economists were hotly debating among themselves whether to adopt any kind of code of ethics less than 10 years ago. The insularity of other academic fields has its drawbacks, but the kind of behavior economists have broadly engaged in is much more representative of the business world than academia, and a result of their close ties to those interests.

just-juan-post 6y ago

I would suggest you pay attention to the economic stories and not the human interest stories when it comes to this virus. Did you know that 50% of San Fransisco's stores have closed? Half. HALF. https://www.sfgate.com/business/article/Half-of-all-San-Francisco-storefronts-have-closed-15513726.php https://www.sfgate.com/business/article/Half-of-all-San-Fran... Did you know 250,000 evictions are looming in Las Vegas alone? https://www.ktnv.com/news/coronavirus/las-vegas-could-face-eviction-crisis-amid-pandemic https://www.ktnv.com/news/coronavirus/las-vegas-could-face-e... These are very real threats - not some fun internet discussion about inflation or gold or bitcoin. Your poo-poo'ing of economists is very out of context in this case. The evidence is right in front of your face and you can find it on Google News.

toinetoine 6y ago
Las Vegas, a town where the majority people are employed in the hospitality/leisure industry (casinos, restaurants, convention prep, etc.) SF where a huge amount of the residents have left the city since a majority of the white collar employees are WFH for the foreseeable future. Not sure how you can take these places and extrapolate for the economic health of the entire country...
- nkozyra 6y ago
  You can special case any city or town. I don't think WFH is endemic to SF, for example. And economic effects cascade down.
  - iso1631 6y ago
    > I don't think WFH is endemic to SF, for example Certainly not. I don't think it's bad either, but some people (owners of expensive offices) do. https://www.bbc.co.uk/news/business-53925917 https://www.bbc.co.uk/news/business-53925917 -- Warnings of 'ghost towns' if staff do not return to the office As to shareholders of chain coffee/lunch stores -- https://www.bbc.co.uk/news/business-53939526 https://www.bbc.co.uk/news/business-53939526

EasyTiger_ 6y ago

I’ve seen impending economic doom being pushed on HN since 2016

disgruntledphd2 6y ago
To be fair, the insanity of both the stock and bond markets started becoming really apparent around then. Still hasn't gotten any more sane, unfortunately.
- lostmsu 6y ago
  Or maybe it is perfectly sane, and you just don't understand mechanisms at play?
  - disgruntledphd2 6y ago
    In so far as the stock market is supposed to reflect the real economy, it's entirely insane. Bonds are being sold that pay less money back than their sticker price. The equivalent is the bank charging you 400k for a 500k mortgage. That's pretty insane. Stocks are apparently worth 30 years of their current profits, even for those stocks without a history of consistent profit (i.e. Tesla, Netflix etc). I understand that lots of this is happening because of incredibly low interest rates, but pointing out that this is crazy is a public service in these ridiculous times.

sb057 6y ago

There's a quote that I sadly can't find the origin of but goes a little like: >Carlyle called economics the "dismal science". He was half-correct; it is indeed dismal.

plazmatic 6y ago

Yeah, I know reality challenges your whole "MAGA" narrative, but the reality is the economy is a disaster. Keep lying to yourself by questioning the experts though, just like with climate change and all the other "MAGA" inconveniences. I'm sure you know better. ROFL.

Seasonwreckage 6y ago

I agree. If you check the consensus a fear years before the 2008 financial collapse, most economists were bullish.

duncanawoods 6y ago

I liked a quote I cannot find that referred to any study that has "schools of thought", like economics, as not studying reality but tribes at war seeking changes / power for ideological ends.

sharadov 6y ago

The numbers are already there, Yelp says 50% of restaurants have closed down permanently https://www.eater.com/2020/6/26/21304219/over-50-percent-of-yelp-restaurants-have-closed-permanently https://www.eater.com/2020/6/26/21304219/over-50-percent-of-... It's not some far fetched doomsday scenario, the stimulus has helped the US economy from completely crashing.

qppo 6y ago

Imagine if we could control the weather. Weatherman forecasts a hurricane, so weather control does what they can to get rid of it. Economics is like that. Economists predict horrible downturn. Economic policy makers do what they can to avoid or lessen its impact. For example, economists predicted that Boeing (among others) was going to need a massive bailout to survive. The Fed purchased a ton of corporate bonds with printed money to juice the bond market and allow Boeing and others to refinance their debt. Do we blame the weatherman for being wrong when steps were taken to change the forecast?

grafs50 6y ago

I have no idea how accurate economists tend to be at predicting the future of the economy. I think its fair to say that economics has done a fair job of coming up with tools to deal with economic issues as the come up, and even preventing a fair amount that we never are even aware of.