I think in order to make sense of my statement we have too look at my view on what economics is.

I view economics as a way of framing issues – not as the set of predictions that economists go out and make. To get from a frame of reference to a prediction we have to make value judgments – testing whether predictions come true simply asks if these were the right value judgments.

I don’t think economic science in itself is about these value judgments – sure a whole lot of economists will go out there and make predictions, but if these are wrong it can usually be put down to initial value judgments being wrong.

There is a flip side to not believing that economists should be judged by their predictions – I don’t think economists predictions can be very good in the first place. The accuracy of predictions has more to do with the individuals involved being able to sort through data and value judgments than it has to do with economic models. As a result, if economists do want to predicit there is definitely something missing from economic education.

As a result, given my view of economics, the statement that “the success of the economic method does not depend on its predicitive accuracy” is as much an insult to people who believe good prediction is possible as it is a “cop out” for economists when their models go awry.

“For the record, several people predicted the broad direction this thing was going to go in. Even I predicted the housing slowdown a few years ago (although to be fair I did say it would happen quicker than it did).”

On this note I would say that close to 95% of economists expected this to happen – just more gradually. Turning points are near impossible to predicit – which is again why I think prediction is not a good criteria for judging economic analysis.

Jeez what a cop out.

For the record, several people predicted the broad direction this thing was going to go in. Even I predicted the housing slowdown a few years ago (although to be fair I did say it would happen quicker than it did). And an economist I ain’t.

I think the problem with many economists is they appear to be wed to over-simplistic models, for seemingly ideological reasons. (This is a generalisation, of course). “The market usually finds an alternative in case of scarcity” becomes “The market always finds…”, to “The market will find… in this specific case”.

But it’s OK, you don’t have to be measured by your predictions.

Hey – they have better data 😛

I completely agree with this Paul – but I also don’t think economics should be judged on the accuracy of its predictions.

I realise that this doesn’t weigh well with Friedman’s view of us as “empirical positivists” – but I think our discipline is a lot better at framing and even describing issues then it is at providing predicitions.