5 ms·
Macro-economic forecasting mostly works but the size of the error bars on the computations are directly proportional to the potential informativeness of the for
by CuriouslyC 2y ago
Macro-economic forecasting mostly works but the size of the error bars on the computations are directly proportional to the potential informativeness of the forecast. Micro-economics is a bunch of toy and niche models, where the accuracy of the model is generally inversely correlated with how broadly applicable it is.
Economic theory is kind of bullshit, they're building predictive models of enormous complex systems and trying to ascribe meaning, the models can be "ok" but the meaning the economists give is personally biased hand waiving about 100% of the time.
- frereubu 2y agoI kind of feel like your second paragraph is helping prove my point. And in my experience the people who build these models are very aware of their limitations (even if some of them do then go on to make overly broad conclusions for publication).
- CuriouslyC 2y agoThe problem is that economists love to ascribe meaning and make confident statements about causality in order to promote personal ideology rather than let the models speak for themselves. These models predict behavior within a narrow range of conditions, but that doesn't tell you anything about the underlying systems. You can model any function over a restricted domain using polynomials, but that doesn't mean that polynomial function is the ground truth of the universe.