Expert economists - the appaling record of prediction

wotsthat

michaels wrote: »

You are writing a book on the UK economy to make money. Do you suggest that we will probably muddle along, with growth between 1 and 5% bar the odd recession and sell about 6 copies (self published) to your family and friends or do you come up with a bold and striking prediction (preferably doom-laden) and make £50k from a Sunday paper serialization and a couple of hundred k from sales. This is especially effective if it fits a picture that can be picked up and run with by one of the political parties.

An economist is probably well placed to know that people like to read things which confirm rather than challenge their biases.

I'd write three books. 'Brexit - even the weather's going to be better', 'Brexit - we're doomed and puppies will die' and 'Brexit - it's probably going to be OK; maybe'.

Of course the second will be most successful because it combines everyone's favourites - doom and puppies.

TrickyTree83

wotsthat wrote: »

An economist is probably well placed to know that people like to read things which confirm rather than challenge their biases.

I'd write three books. 'Brexit - even the weather's going to be better', 'Brexit - we're doomed and puppies will die' and 'Brexit - it's probably going to be OK; maybe'.

Of course the second will be most successful because it combines everyone's favourites - doom and puppies.

And the economist who writes a book about doom and gloom hasn't factored in (because they couldn't possibly be aware) of the woman from Rochdale who has developed a 3D printable car that runs on water. Cutting production costs and fuel costs whilst saving the planet, which goes on to become a global success larger than Apple Inc.. employing millions of British workers.

Alternatively the same economist could be incorrect because this invention occurs within the EU and the citizens of the UK are frozen out of such an enterprise and have to watch on the sidelines as our entire motor industry collapses. So his predictions were not even severe enough.

It's impossible to predict, which is why they shouldn't be listened to.

kabayiri

Control system engineers would not build control systems for things like Nuclear reactors with the kind of tools available to economists.

You can't predict future events with an essentially open ended system.

Economics is just educated guesswork, but it does not mean it has no value.

Thrugelmir

kabayiri wrote: »

Economics is just educated guesswork, but it does not mean it has no value.

Like sailing. You constantly adapt to the changing wind direction.

TrickyTree83

kabayiri wrote: »

Control system engineers would not build control systems for things like Nuclear reactors with the kind of tools available to economists.

You can't predict future events with an essentially open ended system.

Economics is just educated guesswork, but it does not mean it has no value.

Theory on how to do things/how things work - fine.

Predictions such as the like we've seen during and after the EU referendum vote - not fine.

I could come up with a theory on how much custard creams cost to make. It would be a series of input variables and calculations that output the predicted cost based on the all important input variables. As you pointed out this is easy because it's not really open ended.

I can take the typical cost of the ingredients to make the biscuit and the cream and extrapolate (predict) that the total cost of the pack of 10 custard creams will cost X. Depending on the variables you input at the start the theory will output the correct answer based on the input variables. If I made the assumption that sugar cost Y but it actually now costs Z, the model would still work if I updated my input variable for sugar. But if in future there is a new ingredient that I wasn't aware of when I wrote the model, the model is wrong and its predictions on the cost of 10 custard creams is also wrong.

When these people predict that we will lose £n billions over Brexit they are not factoring any of the changes that will happen in the future, because they are completely unknown variables, variables that sometimes these people cannot even perceive coming to pass. Like Brexit will cost £66bn, then there's war between Russian and America (involving NATO) and £66bn is a conservative estimate of the losses during the period after we leave the EU because everyone dies.

Therefore in my opinion their work has no value in prediction.

I don't know why in recent times there's been this obsession with economists predictions. They are consistent only in requiring to revise their predictions.

westernpromise

Conrad wrote: »

Just a few examples I've gathered that demonstrate the appalling predictive record of economists and social scientists (and those using their works);




2007 – the consensus amongst Economist was that it would be plain sailing. The global financial crash came in 2008.


In 2008 as oil surged to $140 a barrel, experts said it would soon hit $200 p barrel; a few months later it plunged to $30.


From the most widely used Economics textbook of the 1960’s ‘Economics: An Introductory Analysis’ by Economist Paul Samuelson – told us the USSR would overtake the US in economic power by 1997. By 1997 the USSR did not exist


1988 Clyde Pestowitz wrote the book ‘Trading Places’ which was an account of the coming Japanese dominance. He totally failed to spot China, not giving it a mention.


Alvin Toffler in 1970 wrote a best seller that warned of ‘Future Shock’, that the Human brain would not cope with the pace of change. By 1979 he told us global riots would have bought civilisation to a standstill.


Paul Ehrlich – The End Of Affluence – 1974 – ‘the age of scarcity has arrived’. ‘We are facing the disintegration of nation states……..by the year 2000 the UK will be a group of impoverished islands’. ‘This global new dark age may well see the end of civilisation’.


1967 – William and Paul Paddock – published ‘Famine 1975’ which predicted global famines


1968 Paul Borlaug – the father of the green revolution warned of the impending doom and global famine just around the corner


Knight – Riddle Newspaper chain 1974 ran a 4 part series on the end of civilisation. ‘a host of powerful forces has come together to shake the very foundations of civilisation’


Richard Faulk – Princeton University in ‘This Endangered Planet’ – wrote ‘people will increasingly doubt whether life is worth living, the 1990’s will witness the era of catastrophe and the 21st Century would be the era of annihilation’


Desmond King-Hele, the British scientist writer in ‘The End Of The Twentieth Century’ wrote – ‘has man a future? Probably not – or at the least disastrous’


Valery Giscard d’Estaing, the French President wrote ‘the 4 horsemen of the Apocalypse had arrived’


International Panel chaired by Willy Brandt (former German Chancellor )told us - ‘the 1980’s would witness greater tragedies than the 1930’s
Late 1970s – Jimmy Carter gathered the renowned Economists of the age and concluded that peak oil was about to be reached, informing the people in his state of the nation address’s. After this oil promptly fell and stayed cheap for 2 decades.

And who can forget Bill gates' 1995 dismissal of the Internet in his book The Road Ahead, or the UN's "50 million climate refugees by 2009".

glasgowdan

I've not read any of this, but many of the quotes in the OP could well be true, we just don't know yet or don't realise.

Conrad

TrickyTree83 wrote: »

I don't know why in recent times there's been this obsession with economists predictions. They are consistent only in requiring to revise their predictions.

I've read up on this. Psychologists refer to a deep need within Human Beings to try and predict the future and nature of things, and that 'wise' old sages and Shamans are always sought to provide this service. Always been the same.


They talk of the 'usual talking heads' doing the media circuits for years on end making one bad prediction after another, but still we yearn for their musings to help give shape to the future.


They talk of foxes and hedgehogs citing hedgehogs being akin to those that are certain about the future, that know only one way to cross the road, unlike the fox who knows many ways and is more flexible. The more certain the prediction, the more likely it will turn out wrong.

wotsthat

Conrad wrote: »

The more certain the prediction, the more likely it will turn out wrong.

Who, on this board, is making the most bold and certain predictions about the future of the UK post-Brexit?

TrickyTree83

Did we come to any consensus regarding the acceptability of economic predictions?

The OP should put a poll on the thread - if that's possible retrospectively.

Put me down for "not worth the paper they're written on".