Where is the dream team of economists to tackle the slump?

ess0two

ad9898 wrote: »

Can't you just make a point without being personal or baiting ?, whether you agree with !!!!!!? or Wookie, they have contributed a lot more to the discussion on the board than the likes of yourself.

We can all submit wild predictions,such as !!!!!! this time last year he was predicting total melt down.
Me i fell in here by total accident thru a search engine last year.

I could question what do you offer?

ess0two

mewbie wrote: »

I thought he was referring to essotwo? Did you forget who you were logged in as?

Whilst we may have the same views,i'm me.

Strapped

Degenerate wrote: »

Very succinctly put. The meteorology comparison is a good one; much as a meteorologist is dealing with the outcome of an uncountably huge set of variables, economists are trying to model the financial behavior of over six billion people. It's very much a case where chaos theory applies, though unfortunately that doesn't promise much in the way of predicting things.

I used to work in air transport forecasting which was based on (someone else's!) economic forecasts to predict future numbers of passengers, aircraft movements, demand for stands, car parking, etc...thankfully most airport planning takes 15-20 years so I'm not there now to have to defend those forecasts! :rotfl:

lostinrates

penguine wrote: »

Where is the dream team of economists to tackle the slump?.

Who knows. I am also struck by the dearth of intellectual giants of our time. I'm sure they are there, but we don't notice them as they are not on s Simon Cowell show or Big Brother. Perhaos the genberation fed this ''intellectual diet'' will have even fewer great thinkers to further advance our thoughts and reasonings. As long as we have new and exciting computer games, will we mind or care?

treliac

bubblesmoney wrote: »

too bad quite a few of the economists havent learnt some basic common sense that you cant follow a policy of spending money that you dont earn and keep following the stupid deficit spending policy till eternity. sooner or later that policy is going to land us up shitscreek without a paddle.

Works well for many of us, at micro-level.

Maybe could work well at macro-level. But doesn't allow for greed, stupidity or reckless speculative behaviours - i.e. human nature!

treliac

lostinrates wrote: »

As long as we have new and exciting computer games, will we mind or care?

Probably not ... until we can no longer afford them.

ad9898_3

ess0two wrote: »

We can all submit wild predictions,such as !!!!!! this time last year he was predicting total melt down.

Fair enough, but if !!!!!!? was predicting meltdown this time last year, I would say he got pretty close to the mark, even Darling was saying that we were literally hours away from global financial meltdown last autumn, ok that seems to have been averted now but some would say the housing market is in meltdown, with 20% off values, mortgage approvals at less than half of their normal value (even for a recession), and more economic woes to come.

ess0two

ad9898 wrote: »

Fair enough, but if !!!!!!? was predicting meltdown this time last year, I would say he got pretty close to the mark, even Darling was saying that we were literally hours away from global financial meltdown last autumn, ok that seems to have been averted now but some would say the housing market is in meltdown, with 20% off values, mortgage approvals at less than half of their normal value (even for a recession), and more economic woes to come.

I've probably out stayed my welcome here,to some extent...........

But this place is addictive,everyone's entitled to a POV,but some border on ridiculous.

penguine

bubblesmoney wrote: »

the problem with mathematical models and a hoard of people following the same model is that it will be a self fulfilling prophecy. everything is hunky dory till someone does not follow how the model says they should be investing or managing their money.

I think the problem is more likely to be that the models don't count for individual variations in behaviour, or for the likelihood that most people don't listen to economists when deciding what to do with their money. From the linked article:

To those who believe in it, general equilibrium theory is a beautiful expression of the world assuming that the price mechanism works to align demand with supply and that human beings are rational economic agents. There is no room for the idea – supported by Minsky and Schumpeter – that instability is inherent to the economy, and might be good for it.

Experiments have shown just how limited the modern approach can be. Try this one for size: you are given £100 and told to share it with a stranger. If the stranger accepts your offer you get the money, but if he rejects it neither of you get a penny. How would you divide the cash? An economist's answer is that you offer the stranger £1 and keep £99 for yourself. That way you are both better off but you maximise your benefit. But this is not what tends to happen, since it offends people's sense of fairness. Many people share the money equally.

michaels

But does it apply in this instance that you can aggregate up rational micro (individual) decisions and get to an optimal macro equilibrium? Surely what we are talking about here is Keynes' paradox of thrift - if we all try and save for a rainy day that suddenly looks a lot more likely than before then we will succeed in bringing about the negative outcome - back to our meteorology comparison, if would be as if more people expect the bank holiday to be wet and abandon bbq plans it would actually make it more likely for it to rain...

Economists have therefore spent a bit of time of late studying game theory to try to get a handle on how people might behave when facing repeated individual interactions rather than traditional theory which assumes unlimited agents with perfect information.

The behavioural economics can also be usefully added to macro economic models - there is no point assuming that people make lifetime choices depending on what is best for them over a long period discounting the future at an individual rate of return when experiments (and everyday experience) shows that individuals will often make that impulse buy. One of my favourite theories is satisfysing - one that individuals will look at each choice individually on a 'does that seem to make sense to me right now' basis rather than following some life plan.

treliac wrote: »

Works well for many of us, at micro-level.

Maybe could work well at macro-level. But doesn't allow for greed, stupidity or reckless speculative behaviours - i.e. human nature!