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That's important because it's a pure mathematical model which may be wrong as it cannot take in all influences that drive it.
by bb88 2y ago
That's important because it's a pure mathematical model which may be wrong as it cannot take in all influences that drive it.
- deleted 2y ago[deleted]
- nimish 2y agoDing ding ding "All models are wrong, some are useful"; Why should I care what the ATL Fed's GDPNow model predicts? By all accounts a mathematical model is only as good as its assumptions and we know even the best economic models have spherical cow level assumptions
- whatshisface 2y agoMathematical models are so inflexible and unresponsive to real-world, commonsense facts, that as far as I know the value of what's in my pocket goes up at the grocery store. What we need is a grounded, grassroots approach to banking that eschews the elitism of sums involving numbers that, as far as anyone knows, are no more real than Plato's perfect spheres.
- FredPret 2y agoSome of these numbers are nearly impossible to measure because: - tech gets better - products move upmarket as companies target richer customers - sometimes, products move downmarket and gets worse - products fall out of use and new ones take their place With something like TV's, we can clearly see deflation at work. Your dollar buys vastly more TV than in 1990. But what about education? That's nearly impossible to measure because we're learning different things. So if the price goes up by, say, 100%, how do we offset that against the nearly unmeasurable change in value? You can see why economists resort to measuring Platonic, spherical eggs.
- whatshisface 2y agoThis is a GDP "nowcast," which only involves measurable numbers. The main criticism of GDP is that by focusing on the exchange of currency, it underestimates barter and social exchanges such as are prevalent in developing countries and Bethesda's Fallout series.
- dgfitz 2y ago> But what about education? That's nearly impossible to measure because we're learning different things. At least at the college I attended, what you studied had zero correlation to the cost, every full-time student paid the “same” tuition as everyone else.
- bee_rider 2y agoWithout using any elitist numbers, can you express the odds that somebody will miss this parody?
- JumpCrisscross 2y agoI’m missing the source (and don’t know if I know it), but am curious :P
- bee_rider 2y agoI don’t know if it is a quote or meme or anything like that, it might just be some bespoke hand-crafted parody.
- stouset 2y agoIf you have a better idea, a literal Nobel prize awaits.
- jredwards 2y agoAh, but you're wrong. The "Nobel Prize" for Economics is actually not a literal Nobel Prize but one established by the Nobel committee after Alfred Nobel's death which has some distinctions making it different from the others. But that's all just me being pedantic :) https://en.wikipedia.org/wiki/Nobel_Memorial_Prize_in_Economic_Sciences https://en.wikipedia.org/wiki/Nobel_Memorial_Prize_in_Econom...
- stouset 2y agoA literal one but perhaps not an original, authentic one :)
- ummonk 2y agoGDP itself is a mathematical model too - just a much more sophisticated one which utilizes more data.
- JumpCrisscross 2y ago> GDP itself is a mathematical model GDP is a metric. The specific way in which we construct it is based on a small zoo of models, each working to estimate a myriad of parameters.
- gruez 2y agoIt's estimated via a model. We don't actually know the value of all economic activities happening in the country. We just have statisticians survey some fraction of businesses on how they're doing, and plug those result into a model to estimate how the entire country's doing.
- JumpCrisscross 2y ago> It's estimated via a model So is every physical constant. The gravitational constant is a metric. We then measure it by way of models. GDP isn’t a model per se. GDPNow is.
- JumpCrisscross 2y ago> it's a pure mathematical model which may be wrong Sort of. It means it requires interpretation. An altimeter is an analog mathematical transformer. It takes a trained pilot to properly read it in cold weather. Similarly, GDPNow is not a headline number, but a tracking model. Someone struggling with the definition of GDP isn’t its intended user.
- yorwba 2y agoNo model can take in all influences that drive the economy. The more important aspect of it being a pure mathematical model is that there's no fudge factor for how much they like the current government. So it's not like the Doomsday Clock where the number is intentionally adjusted to drive the news cycle. Rather, the GDP nowcast dropped because of the release of economic data that was historically associated with a drop in GDP. So if the model is wrong in this particular instance, there would have to be some reason why the historical association no longer holds.
- t_mann 2y agoWithout knowing the detail, it's almost certainly a statistical model. Call it ML if you like. GDP nowcasting models take contamporaneously observable variables like foot traffic as features and GDP - which is observable only with a several-month lag - as the target. The same caveats as with all statistical models apply. We only see the relationship as observed in the past and it only captures correlations (clearly, foot traffic in and of itself does not meaningfully cause GDP).
- mitchbob 2y agoAll models are wrong, but some are useful. https://en.wikipedia.org/wiki/All_models_are_wrong https://en.wikipedia.org/wiki/All_models_are_wrong