Discussion Tuesday

Criticising broad economics for measuring and discussing issues on the basis that macro forecasts predictions are inaccurate is equivalent to criticising climate science because weather forecasting is inaccurate.



10 replies
  1. MillAhab
    MillAhab says:

    Matt thought you would enjoy this from Robert Skidelsky:


    Also with the topic of wages/income in the news alongside NZ’s supposed “Rock-Star-Economy” status I was hoping you (or anyone else out there Econ cyber-land) may be able to help with the following:

    The OECD recently did some analysis on the % of income/wealth in each country that is attributable to labour and what is attributable to capital (I can’t find it online). Treasury also does these calculations I believe, and the split in NZ is something like (approx) 60% to capital and 40% to labour. Apparently only Mexico, Turkey and the Slovak republic have less going to labour than NZ.

    Why is this? Is it because the base of our economy is primarily farming/Auckland property speculation etc.? Is it because we don’t tax gains on capital and as a result more activity flows to that side of the ledger? (Tax distortions, dead-weight-losses etc. etc.)

    I would really love to know if you are able to share any thoughts! 🙂

    • Matt Nolan
      Matt Nolan says:

      It looks to me that Skidelsky is attacking lazy economics – there is a definite temptation to equate labour supply and money to welfare, while ignoring the disutility of work, and the relation of policy to non-pecuniary matters. Actual normative/policy analysis shouldn’t – and often doesn’t – do this.

      I hadn’t seen the OECD bit, do you have a link? Would love to have a look and give you my thoughts.

  2. jamesz
    jamesz says:

    I like the analogy. So how seriously should we take climate change predictions? No doubt the historical explanations are pretty good but does that mean the forecasts are any good at all?

    • Matt Nolan
      Matt Nolan says:

      I like the analogy as it can be seen as cutting both ways as well – the key thing is that often those most dismissive of economics are the most supportive of climate science. Given the similarities in methodological issues (with the added complication in economics that we have forward looking agents), the fact people are willing to appeal to authority on climate but not economics is fascinating!

  3. Kimble
    Kimble says:

    … is equivalent to criticising climate change skepticism because the weather is bad.

    I have seen much more of this than the other.

    • Matt Nolan
      Matt Nolan says:

      I’m not really focusing on climate change here – I’m looking into an analogy that compares it to economics.

      It would appear more consistent to be either skeptical of both or supportive of both – but I often find that this is not the case!

  4. Ridwan
    Ridwan says:

    I prefer the actual illustration. How significantly have to most of us get atmosphere adjust prediction? Definitely the actual traditional explanations are generally decent nevertheless can easily which means that the actual rates are generally high quality by any means?

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