Indeed – although I guess it is a fine line between actually being brave and being cocky.

“Perhaps Nicholas Taleb’s black swan should be compulsory reading in all secondary schools then perhaps the public wouldn’t be so easily fooled”

Maybe just teach economics in 3rd form …

Bittersweet I guess 🙁

I jest here but the bloke on tv with a caption under his name of BNZ Chief economist, winner of the Nobel prize in economics will acquire automatic connotations of accuracy and the public are more likely to take on board what is said.

Given the power of the argument by authority, economists when they go on tv in particular need to be more careful of the language that they use. I would much prefer to see sentence structure like, ¨It is our prediction that interest rates will….blah blah..¨ Too often certainty is used where perhaps caution is better advised. Unfortunately certainty is exactly what people crave and those that project it are more likely to get themselves in the public eye. Economists like Krugman in particular who seem to have such a high belief in their own predictive ability seem particularly guilty of this. The Nobel prize hasn’t seemed to added any humility to his prognostications either!

So in essence I think most economists are well aware of their profession’s short comings, unfortunately a some seem to create an artificial air of gravitas where none should exist. Perhaps Nicholas Taleb’s black swan should be compulsory reading in all secondary schools then perhaps the public wouldn’t be so easily fooled.

Now that you say that, I have images of the tragedy of the commons flashing before me. Krugman [and Roubini, and Feldstein, though PK is probably the worst of them all] is simply adding his additional sheep to the commons, which helps him even though it devalues it for everyone else. Of course, at this pace, we’ll get to the point where he destroys his own audience because they decide they can’t trust anyone, including him.

The Lucas critique – a true bane on our empirical models 🙂

“I have to agree with this 100%:”

I very much agree with the statement as well. However, there are economists that are very willing to predict things without specifying risks – I don’t know how they can manage to do it, but it happens.

In fact, many of the economists arguing about the stimulus on US blogs appear to be doing just that 🙁

“Most economists understand the limits of their predictive abilities. We can make general predictions [“easy credit will lead to a bubble”] but we can’t say “the bubble will pop March 17th 2008″ because it’s unrealistic. We’re further confounded by government, as mentioned above. By the same token, biologists can’t say “the polar bear will go extinct in the fall of 2020″ but they can predict that, if things continue, it’s doomed. That’s accepted as a valid and specific prediction in that field: why is more expected of economists?”

Completely agree – I find it annoying that the natural science are given a relative “free-ride” in terms of their predictive accuracy. I guess it is because economics is looking at human nature – and everyone feels that they know a bit about human nature 😉 (I just saw you made this point – I write comments as a read down paragraph by paragraph 🙂 )

“Fortunately for the profession, the perception does not match the reality. Unfortunately, public opinion matters even to economists, and we’re losing that battle.”

I agree, but there is one thing I would add. The current behaviour of a large group of macroeconomists is doing nothing to help the public perception of us – in fact it is making it worse. Does Krugman care that he is spending economists reputational capital when he calls Barro an idiot – no. It makes me sad 🙁

The economic method is brilliant – the level of economic discourse during a recession is poor – the public ranting of some economists (under the guise of “simplifying things for the public) is a dis-service to society and to our discipline.

It would be very very different wouldn’t it Kimble. Imagine actually being able to recommend policy without have to add 101 provisions for potential outcomes 🙂

Economics lecturers definitely know their stuff. The problem with teaching a second year course is that you have to make things sound “definitive” – you can’t teach the nuances which a lot of the economics stuff requires. This is what sometimes gives it the feeling of being taught “the wrong way round”. It is an issue – but I don’t blame the people teaching it, or doubt their extremely large knowledge.

“t just wasn’t possible to keep saying “but why” until you get back to the fundamental, experimentally verified underpinnings the same way it is with engineering”

It is because these priors are currently unobservable and untestable – its just something that can’t be done at present. When the opportunity arises hopefully economics will be amiable to it – but at present economists are just making use of their limited information.

“it’s not very hard to find cases where homo economicus behaves differently from homo sapiens”

Actually it depends how you define “homo economicus” – it is easy to define him in such a way that he could capture any form of behaviour – the problem is that doing this would make the description empirically empty.

“I guess the ultimate question is: given the obvious flaws in what’s being suggested, why do economists find such a ready audience?”

Even if the flaws are obvious – the solutions obviously aren’t. Economists find an audience because they are able to frame some things in a better way than non-economists – it is as simple as that. If other people could predict things more accurately they could use that knowledge to drive “economists” out of business.

In the above post I have asked if “economists are over-confident” – in other words are they “predicting too much”. I have also heard another criticism of economists – that we say too little, or that we are two handed. It appears to be a case of “damned if you do, damned if you don’t” to me.

Economics provides a great method here – I think some economists have predicted too much as they became overconfident of their methods, but I don’t take that as a fundamental issue with the discipline. I fear that the general public will though …

I have to agree with this 100%:

“Matt, my problem with economists and prediction is that 99% of economists don’t make them. People seems to think that what economists do, and the only thing they do, is make predictions. Most of us wouldn’t go near a prediction if our lives depended on it! The small minority of economists who do make predictions give the rest of us a bad name!”

Most economists understand the limits of their predictive abilities. We can make general predictions [“easy credit will lead to a bubble”] but we can’t say “the bubble will pop March 17th 2008” because it’s unrealistic. We’re further confounded by government, as mentioned above. By the same token, biologists can’t say “the polar bear will go extinct in the fall of 2020” but they can predict that, if things continue, it’s doomed. That’s accepted as a valid and specific prediction in that field: why is more expected of economists?

My guess is it’s because economic issues are a little closer to home than others are, since they affect us directly. Add the fact that a specific prediction makes better TV/paper/blog than general ones, and the media’s general fascination with showing contrasting viewpoints, and you get a public that seems to think that all economists do is fight with one another because each one is sure about everything. Fortunately for the profession, the perception does not match the reality. Unfortunately, public opinion matters even to economists, and we’re losing that battle.

Because talking to engineers about the economy wouldn’t be very enlightening.

Dont you think that every economist wishes that their field of study was as easy as engineering? Imagine it; measureable inputs and verfiable outcomes! Answers to 4 decimal places? Luxury.