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Danish government makes its new economic model open source
- thomasahle 5y agoI wonder if this could be used to automatically suggest new policies? Presumably the optimizer will tell you exactly which input variables to tweak to increase the final number/gpd/which ever. As the saying goes "any metric is bad once you optimize for it", so maybe that would lead to terrible politics. That makes me worry if large actors can use the model to make any self-serving policy suggestion "look" like a good idea for the economy, by combining it with precise information on what the national economics model is sensitive to or isn't.
- LudwigNagasena 5y ago>I wonder if this could be used to automatically suggest new policies? Yes, you tweak variables and look at the impulse-response functions. That's what those models are built for.
- jfnetsec 5y agoWe do a little trolling ;---)
- mdrzn 5y agoIs there an ELI5 of this subject? I read the github but couldn't fully get what that is. A model? To calculate government stuff?
- gunfighthacksaw 5y ago
- futharkshill 5y agoAn actual belief in this is ridiculous, and taking light on literal war and anti democratic effort and meme'ing it as "freedomed" is absolutely disgusting. You know that these are real human beings we are talking about right?
- stusherwin 5y agoAn actual belief in what is ridiculous?
- salt-thrower 5y agoI think that's part of the (dark) joke - "freedom" being the reason that the United States always gives before destabilizing a region and propping up corrupt dictators or puppet democracies which are anything but "free."
- whimsicalism 5y agoYou entirely misread the comment.
- gunfighthacksaw 5y agoOh wow, someone getting upset and moralistic at black humour. I’ve never seen this episode before. No, the real joke is that the US ‘freedomed’ a democratically elected socialist government and replaced them with a ‘pro-freedom’ dictator with the full support of other western countries, as they have done multiple times before.
- aliceryhl 5y agoWhat actually happened to them? It is unclear to me how this could harm Denmark.
- zardo 5y agoA CIA assisted fascist coup followed by tens of thousands of murders by the new government to secure power. Not to say that's a good model for Denmark in 2022, but that's what happened in Chile in 1973.
- _dw7s 5y agohttps://en.wikipedia.org/wiki/Project_Cybersyn https://en.wikipedia.org/wiki/Project_Cybersyn "The system was most useful in October 1972, when about 40,000 striking truck drivers blocked the access streets that converged towards Santiago. The strike was supported by the Patria y Libertad group and at least partly funded by private donors who had received money from the CIA.[5] According to Gustavo Silva (executive secretary of energy in CORFO), the system's telex machines helped organize the transport of resources into the city with only about 200 trucks driven by strike-breakers, lessening the potential damage caused by the 40,000 striking truck drivers" Fascinating stuff. Afterwards, https://en.wikipedia.org/wiki/1973_Chilean_coup_d%27%C3%A9tat https://en.wikipedia.org/wiki/1973_Chilean_coup_d%27%C3%A9ta... happened, to prove to the whole world how badly democratic socialism works.
- SuoDuanDao 5y agoAnd the coup that ended the experiment happened on Sept. 11. As Shakespear had his characters say, If this were played upon a stage now, I could condemn it as an improbable fiction.
- encryptluks2 5y ago
- deleted 5y ago[deleted]
- lucian1900 5y agoThe US decided to Chicago all of Chile because of what they did with Cybersyn: workers nationalising industry and planning production centrally. Denmark will be fine.
- boppo1 5y agoI don't understand the use of Chicago as a verb, can you help? Also, do we explicitly know it was the US, or just implicitly?
- guerrilla 5y agoThey're referring to the CIA assisted fascist coup where the Chicago Boys "ran" the economy afterward using it as a place to experiment with their ideology. 1. https://en.wikipedia.org/wiki/Chicago_Boys https://en.wikipedia.org/wiki/Chicago_Boys 2. https://en.wikipedia.org/wiki/1973_Chilean_coup_d'%C3%A9tat https://en.wikipedia.org/wiki/1973_Chilean_coup_d'%C3%A9tat
- boppo1 5y agoThank you.
- SuoDuanDao 5y agoThanks for the explanation, I interpreted as 'Chicago'd' as a reference to the city of Chicago's high violent-crime rate.
- lucian1900 5y agoI guess the Chicago police murdering black communists fits too, although I hadn’t thought of that initially.
- deleted 5y ago[deleted]
- erdos4d 5y agoI wonder if this includes Christiania, the billion Euros of cannabis sold there each year, and the big lift all those drug tourists impart on the local service industry. Beautiful place by the way, would recommend.
- futharkshill 5y agoWhy is it that all weed enthusiasts always believe that MJ has any relevance to the, in this case Danish, economy? The amount of MJ use in Denmark is minimal compared to other countries, and certainly there is no where near "billions" of Euros sold. Certainly "drug tourists" make little to no impact on the tourism of Copenhagen.
- simonklitj 5y agoMaybe drug tourism has little impact, but 24% of adolescents report that they’ve used it in the past year, and 41% report they’ve tried it. With it being illegal, there’s no doubt that a fair amount of money is being moved around society shadily because of it. Source (from 2015): https://www.dst.dk/da/informationsservice/blog/2015/12/narkotika https://www.dst.dk/da/informationsservice/blog/2015/12/narko...
- harles 5y agoIt’s probably still less than what an average adolescence spends on burgers.
- simonklitj 5y agoI think that's true.
- hjort-e 5y agoChristiania is like the least beautiful place in the country...
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- em500 5y agoNote that the model is implemented in GAMS[1], a proprietary language focused at constrained optimization problems (think Matlab, but more niche). This makes it a non-starter for most interested outsiders. [1] https://en.wikipedia.org/wiki/General_Algebraic_Modeling_System https://en.wikipedia.org/wiki/General_Algebraic_Modeling_Sys...
- maxlybbert 5y agoThe New York Federal Reserve has a model in Julia at https://github.com/FRBNY-DSGE https://github.com/FRBNY-DSGE . The Federal Reserve has two models ( https://www.federalreserve.gov/econres/us-models-about.htm https://www.federalreserve.gov/econres/us-models-about.htm and https://www.federalreserve.gov/econres/edo-models-about.htm https://www.federalreserve.gov/econres/edo-models-about.htm ), written in EViews and Dynare, respectively.
- daxuak 5y agoI bet there has to be better solutions than github.
- mkmk3 5y agoPerfect is the enemy of good. Sure there is, though the most popular alternative (Gitlab, from where I'm seated) IPO'd recently, and we know the effect that tends to have. Our national governments are already pretty comfortable with Microsoft products. Do you know any other git hosts that have persistently proven themselves trustworthy and have superior financial incentives? Otherwise it might be better to focus on the meat of this post
- Arnavion 5y agoI'd be happy to focus on the meat of the post, but for completeness, the answer to your question is "The one you run yourselves."
- deleted 5y ago[deleted]
- stubish 5y agoI bet there are not. A 3rd party willing to host and distribute your code for free without any contractual burdens which already hosts the vast bulk of your audience and the tools they will use. Seems a great idea, rather than spending money to self host or pay a different brand name and all the follow on expenses, for a worse result. Unless you are a government contractor.
- CRConrad 5y agoOne would think the Danish government could afford to put up a server of their own, either in some computer lab of their own or a rented one at some purveyor of such. Especially as they wouldn't need a very big one, since they don't actually need all the stupid Web bumf that is good only for making naïve developers think git means github. They could just put actual git on it, publish the address, and people can do a git clone on their command line. They're supposed to be developers, right?
- cs702 5y agoWow, cool! The model is specified as a constrained nonlinear optimization problem for which a solution is found using high-quality proprietary numerical solvers.[a] All partial differential equations specifying the model have a basis in economic theory or in heuristics and approximations shown to be consistent with reality. Parameters come directly from (what I assume is a large amount of) economic data collected by the Danish government. The authors working for the Danish government deserve an A+ for making their code and assumptions public, along with comprehensive high-quality documentation.[b] It was a delightful surprise to click on the link and find... a carefully curated repo. I have only one nitpicking: This looks like the kind of project that should have been -- and in fact probably should be -- implemented in Julia, instead of in a proprietary language. I suspect many heuristics and approximations could be more accurately modeled by ML components, interspersed between equations, as has long been proposed by Julia folks like Chris Rackauckas. -- [a] https://news.ycombinator.com/item?id=30028188 https://news.ycombinator.com/item?id=30028188 [b] https://media.githubusercontent.com/media/DREAM-DK/MAKRO/main/Documentation/Documentation.pdf https://media.githubusercontent.com/media/DREAM-DK/MAKRO/mai...
- MAKROmaker 5y agoThanks! Julia was not even in 1.0 when we started the project, but would absolutely be a great choice today. So far, only the Conopt4 solver can solve our model, which means we have to go through GAMS even if we rewrite in Julia. I saw Rackauckas' JuliaCon presentation where he talks about ML approximations and immediately got excited too.
- fifilura 5y agoI have one question, that i ask with genuine interest, since I have been in a similar position before (although certainly not as advanced). When you develop models like this, what is your stance on testing? All that stuff in a software engineers toolbox, unittests, integration tests, exploratory tests, manual tests etc.
- cs702 5y agoThank you. That makes sense. Also, I fully get why you're excited: The use of "learnable components" for selectively replacing heuristics in models like yours seems like an ideal use case for Julia. (To me it looks like the future of modeling.)
- mediocregopher 5y agoThis is amazing! Whether or not every aspect of it is fully open-source, this is a great step forward towards governments being more transparent about how decisions are being made, and citizens being directly able to make positive contributions to that process.
- kasperni 5y agoThis model is supposed to replace the existing macro model cmoonly used in Denmark - ADAM (Annual Danish Aggregate Model)[1] which has been continuously developed and refined since 1970. You can find the yearly updates back to 1999 here. [1] https://www.dst.dk/en/Statistik/nyheder-analyser-publ/Publikationer/VisPub?cid=18836 https://www.dst.dk/en/Statistik/nyheder-analyser-publ/Publik... [2] https://www.dst.dk/da/Statistik/ADAM/Modellen-ADAM/Download https://www.dst.dk/da/Statistik/ADAM/Modellen-ADAM/Download
- deleted 5y ago[deleted]
- dflock 5y agoThis is fantastic! I'm not qualified to make any, but are you expecting/hoping for/accepting pull requests?
- MAKROmaker 5y agoNot expecting any, and the model is probably too complicated for outsiders to make substantial changes. But anyone is welcome and if the request is good I see no reason why we would not try to incorporate it.
- deleted 5y ago[deleted]
- dane-pgp 5y agoI've often wondered whether the first super-intelligent AI that gets created, if it somehow manages to be both under government control and not put to strictly military uses, might be tasked with modelling the economy and deciding on the "correct" set of economic policies. Extending the scope of AI decision-making outside of the realm of economics seems much harder, though, as there's much less training data for questions like how to educate students in a pandemic, or whether to loosen planning rules for building wind turbines. I suspect that before AI becomes capable of providing good answers to those questions, it will already have changed the world beyond recognition, and probably not in a good way. The best we can hope for is mass unemployment and a UBI, which will also make all economic models obsolete too.
- lifeisstillgood 5y agoIsaac Asimov thought so too :-)
- danuker 5y ago> UBI, which will also make all economic models obsolete too But how would you decide how much to give through UBI next year? How inflation will change in response? How many people will still be needed in jobs? You still need a model, because the world is changing, and a model helps you understand how.
- dane-pgp 5y agoSure, you would want a model to aid decision-making, but if there is (initially) no data for how the economy will behave under a UBI and with 80% unemployment, for example, then all existing models might end up generating predictions or recommendations that don't help at all.
- danuker 5y agoThe model encodes some generalities that may still hold true, given that it was fit on a lot of scenarios, and a lot of brainpower went into it. But sure, it might completely miss some novel phenomenon. It is up to the humans running the model to be aware of its limitations and accuracy. In any case, the more heads thinking about the problem the better, and the model is an approximation of a lot of heads. And the equations can show why it thinks what it thinks.
- ddesotto 5y agoTHIS is the way. It is a step forward in transparency (even though 90% of danes probably don't understand a thing of what was published) which is something no one I know is opposed to. Hope this sets a precedent for other countries to follow!
- hazza_n_dazza 5y agoI guess the way is to verify and check the model over the coming years against the open data which initiated it... so we'll see :) these things can get quite chaotic when taking externalities into account.
- infogulch 5y agoI bet studying this would be a good graduate-level economics course project.
- bigcat123 5y ago
- m00dy 5y agoTurkish Government needs to take a look at this.
- sshine 5y agoDo you mean the Turkiye government? ;) (Reference to the recent news item that Erdogan made a public statement in which he renamed Turkey to Turkiye in English.)
- throwawayboise 5y agoDo countries get to declare how their names are spelled in other languages?
- xunn0026 5y agoExcuse me? Of course! Do people get to declare their name and pronoun?
- throwawayboise 5y agoSo Germany really decided that its name in English is "Germany" and not "Deutchland"? I always assumed those names originated externally.
- zhoujianfu 5y agoI’m pretttttty sure it originates locally! Why would the U.S. tell China to call us “Meiguo”, and why would China listen?
- mortehu 5y agoIf that's your whole reasoning I think "of course!" is an overstatement.
- xunn0026 5y ago
- KingMachiavelli 5y agoDoes this contain the land value tax formulas or is this much higher level than individual property taxes?
- mountainriver 5y agoWow now I’m a fan of Denmark! This is the future of government!
- TIPSIO 5y agoJust now? Denmark is an interesting country for programming and technology education / discovery: https://www.quora.com/What-is-it-about-Denmark-that-many-well-known-programming-languages-were-invented-by-Danish-people https://www.quora.com/What-is-it-about-Denmark-that-many-wel...
- Guthur 5y agoSoon they'll have our entire lives modelled out for us. Know what we'll be useful for, optimise to give us exactly what we need and nothing more. What could possibly go wrong.
- danuker 5y agoStuff will go wrong. This model only needs to be less wrong than the alternatives - such as a human committee. I much prefer a predictable policy in response to the economy.
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- riverdweller 5y agoGreat initiative, but I must ask: is the Greek compound formed from makro and gamy entirely accidental? Because it describes the past twenty years quite accurately.
- ricksunny 5y agoGreat! Are you familiar with the economic simulation work Threadneedle under Jacky Mallett in Iceland? https://github.com/jackymallett/Threadneedle https://github.com/jackymallett/Threadneedle
- zwaps 5y agoInteresting, although a bit dubious. The claim is that there are no microstructure models in banking, and in the paper he cites two econ 101 textbooks. I mean, I guess the introduction is technically correct in stating that these textbooks are not sufficient to develop a microfounded model of banking. But then, one might suggest the author to perhaps look a bit further than Mankiw's 101 book? After all, textbooks treating the subject in more detail than even the present paper do exist, even from heterodox sources, if the mainstream is unacceptable.
- mbar84 5y agoEconomics is not a science like physics. We can't do controlled experiments, we can't falsify hypothesis. This leads to very muddy waters and what you are left with are two kinds of economists: Those who tell people what they want to hear and those nobody listens to. Econometrics gives people everything they want to hear, and with a scientific veneer as a bonus. The HN crowd should however appreciate how susceptible this is to the tyranny of metrics. Claude-Frédéric Bastiat warned of this over a century ago with his parable of the broken window: Think not only of what you can see (the glazier who is employed to repair the window), but also of what you cannot see (the alternative purchase of a suit) had the window not been broken.
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- imtringued 5y agoNeo classical economics is actually a regression even vs classical economics. The moment it became a hard science it lost the human element and became someone's optimization fetish even though nobody can even know what it optimizes for. The even worse part is that some assumptions don't even work in once you look at the math of e.g. accounting. Keynes and Silvio Gesell and Wolfgang Stützel are much closer to how our accounting system known as money works even though both of them lived during a gold standard where it was normal to bend some accounting rules like digging out new gold to create more money or just bend them outright by printing money without any asset backing it.
- LudwigNagasena 5y ago>The even worse part is that some assumptions don't even work in once you look at the math of e.g. accounting. Assumptions don't need to be absolutely true, they have to be good enough to have predictive power. >Keynes and Silvio Gesell and Wolfgang Stützel are much closer to how our accounting system known as money works I doubt.
- eclat 5y agoThe chief danger to our philosophy, apart from laziness and woolliness, is scholasticism, … which is treating what is vague as if it were precise… F. P. RAMSEY. From Popper’s The Open Society and its Enemies
- dkga 5y agoFirst issue: "This is too cool to be true! #1" Nice! Kudos to DREAM!
- deleted 5y ago[deleted]
- CryptoPunk 5y agoThis is the best use of government.
- partiallypro 5y agoI'm a skeptic, this could end up as a tyranny of metrics. Even the smartest people are often wrong about what is best for everyone. There's an information problem in that though there are/will be plenty of metrics, not all of the necessary information can always be known. That's ok for a company, but not an economy. Just make the data "open" to everyone, "the model" itself is a misnomer. Denmark already has one of the most free and open economies in the entire world...hopefully this idea doesn't help to kill the golden goose. I frankly think it will have no virtually no influence or impact.
- pdabbadabba 5y agoWhat are you a skeptic of, exactly? This is the model actually used by the Danish Ministry of Finance to study the effects of various policy changes. I don't think there's any need to speculate about how much influence it will have: it apparently is already in use and guides policymaking. Other advanced economies have their own similar models used for studying and making various aspects of economic policy. I think another poster has provided a link to the model used by the NY Fed. At a high level, I, like you, am fairly persuaded by the Hayekian point that its impossible to collect enough information or otherwise capture the necessary complexity to reliably model even a moderately complex economy with enough fidelity to allow central planning. But this is far short of that. And there does seem to be a need for general models to allow policymakers to make informed decisions. The only alternative would seem to be to make no decisions at all which a) is itself a decision and 2) does not seem to be an option that many people seriously advance. I guess your position could be that these efforts are doomed to failure--i.e., no model will provide useful results. But that position--that no model will provide any amount of useful information, even at very low levels of granularity, is a very strong position--much stronger than Hayek's argument against planned economies--that I'd have to see some serious support for. And it certainly doesn't seem like a position that people should accept without a very convincing showing of its futility, given the significant costs of making policy decisions without even attempting to model them, or of making no policy interventions at all.
- hashimotonomora 5y agoSomebody teach Danes about reflexivity.
- ford_o 5y agoAn ELI5 on what are the imputs and maximization criterium?
- viztor 5y agoI read the comment about the unreliability of economics, however I do like to point one thing, most economical model fit well when the economy is doing ok or within a certain range of parameters, until something outside of those safe area happens. Think of 2008, and think of the economical impact of the pandemic. It's impossible to account for in prior models and thoughts as those are nonlinear events almost no one can predict. This is the thing with economy, we can only know a bit about our position and surroundings, but we have no way of knowing if we are in a local optimum, or if we are approaching a tipping point that invalidates all prior models. There are variables that don't matter until they reach a certain mass, there are metrics we simply can't find quantitive method to measure, let alone to predict. Economics is always messy, and with a lot of the classic thoughts proven wrong, we should be wary of any of the assumptions we make.
- jollybean 5y agoIt's a bit backwards looking in that it can assess known quantities. But far beyond 'Black Swan' events it's hard to account for innovations, geopolitical shifts, things that change the dynamic. Plastics, the dishwasher, women in Engineering and the workplace, the birth-control pill and Rock and Roll combined to shift things in ways we could not put down in math, at least beforehand. But the biggest 'black hole' is that it does not account for consumer surplus: we only measure what is bought and sold, at that price. We don't measure the leverage gained by consumers for cheap fashion, the benefits of more variety in goods, more vacation, shifting to bikes from cars etc.. The data is still a beneficial area of study however.
- hgomersall 5y agoExcept that some economists did predict the global financial crisis based on their models. The thing that marked them out was that they were all heterodox economists. Largely the predictions were based on a solid understanding of the financial system, something mainstream economics completely ignores. https://voxeu.org/article/no-one-saw-coming-or-did-they https://voxeu.org/article/no-one-saw-coming-or-did-they
- rixed 5y agoWhat makes this model specific to Denmark, apart from the supplied baselines? Also, is anyone aware if such large scale automatic optimisation solvers are used in other departments, such as crime regulation, health care, military?
- lordnacho 5y agoI've yet to read a comment about how well such models predict reality. Who is going to weigh in? I studied economics, and I have some doubts about whether this kind of modelling works well enough to be useful. There's statistical issues like whether you have enough data to bring in your error bars, and theoretical issues like whether the thing you're studying moved below you because it's being studied. Neither of which invalidate the model entirely, but both of which make it a heck of a hard task. And in the end, what matters is whether it works or not. The Lagrangian for quantum physics is some huge formula that gets pushed as meme now and again but it works. Likewise f = ma works perfectly well for your high school rolling ball experiment.
- streamofdigits 5y agoOpen sourcing models that are used for significant policy decisions (affecting others) is somehow required to protect and maybe enhance democracy in the digital age. Applies obviously to the public sector but also to private sector when it operates at large scale as a de-facto regulator / controller / planner of society.