Expert economists - the appaling record of prediction

Malthusian

glasgowdan wrote: »

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.

More pertinently, most of these aren't even economists. Not even "PPE"-type "economists". Alvin Toffler - journalist, Norman Borlaug (who I assume was meant by "Paul Borlaug") - biologist, Knight – Riddle Newspaper - unnamed journalists, Richard Faulk - communist activist, Valery Giscard d’Estaing - politician, Willy Brandt - politician, Jimmy Carter - politician.

You can easily come up with a list of pronouncements about the future from actual economists that turned out to be wrong, this is a very poor effort.

Then there's "2007 – the consensus amongst Economist was that it would be plain sailing. The global financial crash came in 2008." What consensus? Which economists? I had a subscription to The Economist at the time - economists of every stripe had been warning that there was a debt bubble which had the potential to cause a crash for years. Admittedly they were unable to predict exactly when it would happen but if economists were capable of that they'd all be trillionaires.

wotsthat

TrickyTree83 wrote: »

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".

You (I think) believe Brexit will be better, over time, for the UK economy and for the peoples of the UK? That's an economic prediction - what you're trying to say is that you value your own predictions above those of others. Especially if those others make a differing prediction to your own.

Just a continuation of the theme of how best to demonstrate confirmation bias using the medium of irony.

TrickyTree83

Malthusian wrote: »

More pertinently, most of these aren't even economists. Not even "PPE"-type "economists". Alvin Toffler - journalist, Norman Borlaug (who I assume was meant by "Paul Borlaug") - biologist, Knight – Riddle Newspaper - unnamed journalists, Richard Faulk - communist activist, Valery Giscard d’Estaing - politician, Willy Brandt - politician, Jimmy Carter - politician.

You can easily come up with a list of pronouncements about the future from actual economists that turned out to be wrong, this is a very poor effort.

Then there's "2007 – the consensus amongst Economist was that it would be plain sailing. The global financial crash came in 2008." What consensus? Which economists? I had a subscription to The Economist at the time - economists of every stripe had been warning that there was a debt bubble which had the potential to cause a crash for years. Admittedly they were unable to predict exactly when it would happen but if economists were capable of that they'd all be trillionaires.

And yet this is equally true.

https://www.ft.com/content/50007754-ca35-11dd-93e5-000077b07658

If there's enough of them saying different things someone will eventually be right, or close enough.

It's no different to football punditry in that respect, guess the first 11, guess who wins. Because Mark Lawrenson tries to predict the scores and outcomes of games versus celebrities, he gets some right, he gets some wrong. Some consider him an expert, some don't. If the celebrity beats him, does that mean the celebrity knows more or just that the celebrity got lucky? Of those who consider him an expert, what's the excuse when he gets it wrong?

I find it quite simple to explain away - you can not predict the future. Anyone who says they can is a liar, for me putting any faith in prediction is misplaced. Especially as far out as HM Treasury was attempting to do when forecasting out to 2030! Absolute madness.

TrickyTree83

wotsthat wrote: »

You (I think) believe Brexit will be better, over time, for the UK economy and for the peoples of the UK? That's an economic prediction - what you're trying to say is that you value your own predictions above those of others. Especially if those others make a differing prediction to your own.

Just a continuation of the theme of how best to demonstrate confirmation bias using the medium of irony.

I've not tried to predict any monetary values, or cost v benefit analysis of an undetermined future.

I think we'll be better off as a country if we can trade freely with everyone. You might say that's a prediction of a particular outcome if we undertake particular steps to achieve that outcome. I believe it's taking an agreed economic model - free trade - and applying it not just to the EU member states + a handful of treaties the EU have negotiated but to everything we do as a nation. So rather than a prediction it's a belief in an ideology for me. A free-marketeer.

I think there's definitely a distinction between economic ideologies and economic forecasts/predictions.

Would you still say it's a prediction? I think I'd find it hard to say that belief in an ideology such as the free market or Christianity or socialism is a prediction.

kabayiri

wotsthat wrote: »

You (I think) believe Brexit will be better, over time, for the UK economy and for the peoples of the UK? That's an economic prediction - what you're trying to say is that you value your own predictions above those of others. Especially if those others make a differing prediction to your own.

Just a continuation of the theme of how best to demonstrate confirmation bias using the medium of irony.

Maybe Brexit is a risk assessment?

If you think the UK economy could shrink by 5% in the mid term, but that the EU could go into a much deeper contraction, then isn't it essentially the same?

Essentially, I think the world will change even faster in the decades to come. The ability to respond in an agile fashion could prove crucial.

Is it easier for 28 countries to change as a collective, or just 1?

wotsthat

TrickyTree83 wrote: »

I've not tried to predict any monetary values, or cost v benefit analysis of an undetermined future.

I think we'll be better off as a country if we can trade freely with everyone. You might say that's a prediction of a particular outcome if we undertake particular steps to achieve that outcome. I believe it's taking an agreed economic model - free trade - and applying it not just to the EU member states + a handful of treaties the EU have negotiated but to everything we do as a nation. So rather than a prediction it's a belief in an ideology for me. A free-marketeer.

I think there's definitely a distinction between economic ideologies and economic forecasts/predictions.

Would you still say it's a prediction? I think I'd find it hard to say that belief in an ideology such as the free market or Christianity or socialism is a prediction.

I'd call it an economic prediction. You predict that if we have more free trade we (us in the UK,Africa etc) we'll be better off i.e. you predict there will x% more money in people's pocket.

Calling it a good thing because you have an ideology or belief system is dancing on the head of a pin. You don't believe in free trade because of ideology - you predict more free trade will lead to better lives.

wotsthat

kabayiri wrote: »

Maybe Brexit is a risk assessment?

If you think the UK economy could shrink by 5% in the mid term, but that the EU could go into a much deeper contraction, then isn't it essentially the same?

Essentially, I think the world will change even faster in the decades to come. The ability to respond in an agile fashion could prove crucial.

Is it easier for 28 countries to change as a collective, or just 1?

Risk assessment is the same thing. That assessment relies on your predictions and whether you've identified the hazards correctly.

You predict we'll be better off outside the EU based on predictions about the future benefits of agility in your predicted faster changing world.

On 23rd June everyone made a choice made on their prediction about whether leaving the EU would be better or worse. On here we've spent may months, all of us, justifying why our predictions were better than those who made a different choice.

Yet here we are with a thread about the futility of predictions particularly those made by experts and it's only me that sees the irony?

kabayiri

wotsthat wrote: »

...
Yet here we are with a thread about the futility of predictions particularly those made by experts and it's only me that sees the irony?

I think there is validity in questioning the quality of tools we have to make predictions.

The other point is what is our end goal, and how do we measure progress towards that end goal?

We never get to agree what aspects make living in the UK special. It clearly is, else there wouldn't be millions trying to come here every decade.

macca1974

I did a degree in economics many years ago and most of the time was spent looking at the different theories from different schools of thought on the subject. Some thought monetary policy was the way forward in running an economy, some thought fiscal policy, some thought leave the market to it and you'd get the best outcomes. The people that design the models that then make predictions have to make assumptions and these are generally based on what has happened in the past alongside their expectations of what would happen in the future (based on the "school of thought" that they agreed with). So a model or prediction is going to based on assumptions that may or may not come true.

It is though predicting the future based on how billions of people will act and many of them will act irrationally and there will be many unexpected events. So it is at best a well educated guess, but no more than that.

In the proper Sciences, you discover "facts" by conducting experiments in controlled situations that allow you to determine how things act in certain situations. Its a bit more of a challenge to do this for Economics as it would involve taking over the world!

The problem with any of the predictions about Brexit I think, is that those people who agree with Brexit want to argue that everything will be rosy and those that wanted to remain will argue that everything will be terrible. Personally, I imagine it will be somewhere in the middle (although a lot will depend on how the City fares IMHO). The problem of course is that nobody has ever left the EU before, so there is no data to make predictions and even if you did, no way to predict how rationally or irrationally the various players will act.

And this by the way is a proper economists answer, in that I have used many words to say very little and have avoided any conclusions!

Thrugelmir

kabayiri wrote: »

If you think the UK economy could shrink by 5% in the mid term

What's GDP? Does it have real value. Given that it is statistically inaccurate and constantly being revised years after the date on which the data was originally released.

One always has to consider that there was no let up in UK consumer borrowing in Q2 of 2016. The debt pile gets bigger and bigger. Spend today tomorrows earnings. Not a healthy sign.