Economists and weathermen..

Graham_Devon

Interesting article out today. Andy Haldane, the BOE chief economist, has basically compared economists (at least from the BOE) to Weathermen.

It's interesting, because at least there is some admittance now that they focus on what they wish to see, rather than what could be seen. He also admits that the predictions following the brexit vote were wrong, stating "fair cop, we were wrong".

*Note: Brexit VOTE. There seems to be some confusion over this at the moment!!!*

They still, though, deny that their predictions leading up to the referendum vote were laid out in order to support the remain vote - even if there is a whole load of evidence to suggest otherwise.

The Bank of England’s chief economist has admitted his profession is in crisis having failed to foresee the 2008 financial crash and having misjudged the impact of the Brexit vote.

Andrew Haldane, said it was “a fair cop” referring to a series of forecasting errors before and after the financial crash which had brought the profession’s reputation into question.

Blaming the failure of economic models to cope with “irrational behaviour” in the modern era, the economist said the profession needed to adapt to regain the trust of the public and politicians.

https://www.theguardian.com/business/2017/jan/05/chief-economist-of-bank-of-england-admits-errors

I do wonder what this means for the profession looking forward the next 10 years or so. Along with polling, there seems to be an inevitable move to disbelieving predictions from economists and pollsters as soon as they open their mouths.

Just learned that Theresa May criticised the BOE for reducing interest rates and dumping more QE into the economy after the vote too.

CLAPTON

Graham_Devon wrote: »

Interesting article out today. Andy Haldane, the BOE chief economist, has basically compared economists (at least from the BOE) to Weathermen.

It's interesting, because at least there is some admittance now that they focus on what they wish to see, rather than what could be seen. He also admits that the predictions following the brexit vote were wrong, stating "fair cop, we were wrong".

*Note: Brexit VOTE. There seems to be some confusion over this at the moment!!!*

They still, though, deny that their predictions leading up to the referendum vote were laid out in order to support the remain vote - even if there is a whole load of evidence to suggest otherwise.



http://www.bbc.co.uk/news/uk-politics-38525924

I do wonder what this means for the profession looking forward the next 10 years or so. Along with polling, there seems to be an inevitable move to disbelieving predictions from economists and pollsters as soon as they open their mouths.

I think you was doing a dis-service to weathermen : the weathermen are better at forecasting and not overtly politically motivated

Graham_Devon

Just browsing through some of the guardian comments and it's an eye opener.

There seems to be an acceptance, even by Guardian readers now who threw everything and the kitchen sink at remain, accepting that the scare tactics were just that. They also seem to accept (by way of voting on comments) that the treasury etc were under pressure to paint the gloomiest picture they possibly could.

I actually feel very sorry for the experts that were wheeled out by the Remain camp

They would have been under incredible pressure (in some cases, careers) to back the status quo and the establishment

Aided by the fact that so much was unknown it was easier to groupthink their way to negativity than something new. After all, no-one expected a Leave win

It wasn't "forecasting", it was scaremongering pure and simple. They were just making up that crap to frighten people into voting the way they wanted them to vote. Despicable, utterly despicable.

Just two of the highest rated comments on the guardian of all places!!

MacMickster

CLAPTON wrote: »

I think you was doing a dis-service to weathermen : the weathermen are better at forecasting and not overtly politically motivated

Weather forecasting is a science. Economic forecasting is not a science. It may be an art but, if so, it appears that the artists have not progressed much further than finger painting in a nursery class.

mayonnaise

Andy Haldane: Bank of England has not changed view on negative impact of Brexit

http://www.independent.co.uk/news/business/news/andy-haldane-bank-of-england-has-not-changed-view-on-negative-impact-of-brexit-a7511351.html

The resilience of the economy in the wake of last June’s Brexit vote has not prompted the Bank of England to change its view that the UK will suffer near-term damage from last June’s Brexit vote, the Bank’s chief economist has said.

“There has been more resilience among consumers and in the housing market than we had expected. Has that led us to fundamentally change our view on the fortunes of the economy looking forward over the next several years? Not really. This is more a question of timing than of a fundamental reassessment of the fortunes of the economy.

wotsthat

Another 'economists are rubbish unless it's my bias they're confirming' thread.

CLAPTON

wotsthat wrote: »

Another 'economists are rubbish unless it's my bias they're confirming' thread.

I agree for achange

what we need is a simple review of the last 10 (say) years of BoE forecasts and a comparison with out-turn.

Graham_Devon

wotsthat wrote: »

Another 'economists are rubbish unless it's my bias they're confirming' thread.

Take it you don't much care for the article then?

Does it not confirm your bias?

It's quite a large story to be fair. Complaining about the "amount of threads" when there appears to be very few on the subject of economists suggesting they themselves got it wrong appears to translate into a complaint about such issues which you don't much care to see being put in front of you.

CLAPTON

I particularly liked Haldane comments about numeracy.

Haldane said: “I’ll give an example of where Britain is punching well below its weight and that’s in core numeracy skills. There are 17 million people who have levels of numeracy that are no better than those expected of primary age children. In a recent OECD study that looked at numeracy as it applies to financial literacy, the UK came 17th, just above Albania, on questions of financial literacy.”

He added that the UK’s lack of numeracy skills across more than half the working population was a key reason for its lack of productivity growth since the financial crisis.

One can reasonably conclude he was talking about the situation at the BoE.

wotsthat

CLAPTON wrote: »

I agree for a change

what we need is a simple review of the last 10 (say) years of BoE forecasts and a comparison with out-turn.

Of course you're being sarcastic. I'm sure you read every BoE inflation report from start to finish and have many issues with the quality of the reports and the logic behind the conclusions they reach.

If someone can demonstrate the way to forecast the future is to take a BoE forecast and apply a certain factor to account for the BoE forecast always being wrong there's a Nobel prize in it for them.

Conrad

wotsthat wrote: »

If someone can demonstrate the way to forecast the future is to take a BoE forecast and apply a certain factor to account for the BoE forecast always being wrong there's a Nobel prize in it for them.

I've for years on here been on about 'expert' economists appalling track record when it comes to BIG TICKET predictions (not day to day mundane housekeeping stuff).


Closed minded people simply don't make the effort to study the evidence.


The evidence is profound; Economists and Social scientists have an appalling track record - I've given many many examples in the past.


Again I point you to the fact peak oil has been predicted as imminent more than 5000 times in the Washington Post in the last 100 years.


Look up Lemon Hierarchy's. These are structures whereby those at the top of a given structure end up disconnected from reality. I cant tell you how many ills this causes society and still we keep falling into this same trap (WW1 Generals being remote from trench realties is but one of thousands of examples)


I've seen this dynamic in the face. Top bosses prefer positive feedback from middle managers and thus anyone with a counter view is side lined and you get a feedback loop disconnected from the needs of the coal face


Economists are very prone to echo-chamber group-think and not being connected to reality.

If they took time to go speak to people at the coal face, instead of having heads buried in stats and charts, they'd get a better handle on reality


Social scientists
The likes of the London School of Economics survey immigrants and develop a picture completely disconnected from reality.
How so?
Well they go an interview easily accessible migrants, people like themselves, with nothing to hide that aren't on the fiddle and most likely working a good job.


I know from work conferences and talking to thousands of people lime me over years that the reality is utterly different. You cannot dismiss years of similar experience as mere anecdote.