Thursday, January 9, 2020

Lars P. Syl — Is economics — really — predictable?


There is a big difference between predicting and forecasting. Scientific theory is about causal explanation and prediction through formulating testable hypothesis that challenge the theory rigorously based on experimental evidence. Forecasting is making educated guesses based on limited and variable information information. The former applies chiefly to ergodic systems and the latter to non-ergodic, or if the system is actually ergodic, not enough it known about it to construct a rigorous causal explanation.

The ideal causal explanation is in terms of deterministic functions in which a rule applied to a single measurable input results invariably in a single measurable output. The debate over whether statistics can deliver on causal explanation is still raging, in light of the principle that correlation is not causation. For example, Einstein rejected that it could and continued to seek for a set of deterministic functions as the basis for causal explanation in physics, viewing QM as an admission of lingering ignorance about the laws of nature owing to QM being stochastic.

Libraries are full of tomes debating the details of this, but this is a rough outline to which most agree. Thus, forecasting can be "scientific" and even based on causal explanation, but it fails the test of prediction strictly speaking based on performance. The subject matter of the social sciences is more like the weather than planetary motion, and so the results are mixed. There is no ephemeris for economic cycles.

The question how sharp the line dividing prediction and forecasting may be, and this is a matter of argument since no set of criteria are universally agreed upon. Some conventional economists seek to categorize economics with the natural sciences rather than the social sciences, for example. Is that justifiable?

To understand Keynes, it is necessary to take his Treatise on Probability as a starting point.

Why is this important other than philosophically? Because humans are ideological and affected by presumptions as hidden assumptions. We tend to overestimate our level of knowledge, on one hand, and other the other, we inflate our degree of confidence.

To paraphrase Richard Feynman the purpose of science is to prevent us from fooling ourselves and we ourselves are the easiest people to fool (owing to cognitive-affective bias).

Lars P. Syll’s Blog
Is economics — really — predictable?
Lars P. Syll | Professor, Malmo University

11 comments:

Peter Pan said...

Economists are predictable.
Economics is supposed to be about developing policies that will improve people's lives. Mainstream economics is DESIGNED to OPERATE for the enrichment of the few.

AXEC / E.K-H said...

Scientists do not predict.

Who in all history has been preoccupied with prediction? Mainly three groups (i) prophets, doomsters, apocalyptics, fear mongers, gurus, Utopians, astrologers, Pythias and other oracles, rise-and-fall historians/sociologists, (ii) people who want to make a killing in the casino of Monte Carlo or on the stock market, (iii) politicians because for them prediction is a tried and tested tool of mind control/psychological programming.

No scientist is occupied with the prediction of historical events because it is long known that “The future is unpredictable.” (Feynman)

Scientists do not participate in the prediction game.#1 They leave this to the clowns in the political Circus Maximus. Economics is NOT a science but part of the entertainment industry and therefore economists do not get tired of waffling about things that are unknowable in principle.#2

Only charlatans predict the future, and only morons take them seriously.#3

The really disqualifying thing for economists is that they do not know what is knowable. For example 2+2=4 or Q=I−S or public deficit = private profit or the eventual breakdown of Capitalism.#4

Egmont Kakarot-Handtke

#1 Scientists do not predict
https://axecorg.blogspot.com/2016/02/scientists-do-not-predict.html

#2 Economists’ silly kindergarten games
https://axecorg.blogspot.com/2019/05/economists-silly-kindergarten-games.html

#3 Economists: scientists or political clowns?
https://axecorg.blogspot.com/2017/06/economists-scientists-or-political.html

#4 Mathematical Proof of the Breakdown of Capitalism
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2375578

Matt Franko said...

“ really disqualifying thing for economists is that they do not know what is knowable.”

They are trained in the typical Platonist methodology which starts with Socrates... Plato was trained by Socrates...

https://journals.iupui.edu/index.php/advancesinsocialwork/article/download/1905/1867/0

“ The Dialectic Method: A Critical and Postmodern Alternative to the Scientific Method”

OMG....

Here’s a beauty:

“HISTORY OF DIALECTIC METHOD
Socrates: I only know that I know nothing.” This simple phrase uttered by Socrates encapsulates the core of his wisdom, “

Whaaaaaaaaaaatttttt??

You can see here why they killed him....,

Matt Franko said...

We science people left the Platonist academe in about 1860 when Platonist Darwin asserted our great great ... grandparents were chimpanzees (more generally that the dialectic methodology was responsible for creation itself ... see 2 Thessalonians) and it was accepted in the academe....

Scientists formed our own institutions based on Science... 100 years later were sitting on the moon....

Platonists are trying to infiltrate back in like snakes......

Matt Franko said...

“Scientists do not predict.“

We predict successfully ALL THE F-ING TIME.... .?????

Matt Franko said...

Yo both systems here operated EXACTLY as PREDICTED:

https://www.hollywoodlanews.com/iran-shot-down-boeing-737-plane/


We do it ALL... THE... F-ING... TIME...

Matt Franko said...

178 dead people and you morons STILL dont get it...

Peter Pan said...

I "predict" the sun will rise tomorrow morning.

S400 said...

Another 178 dead people and Matt moron STILL dont get it...

S400 said...

Another 178 dead people and Matt moron STILL dont get it...

S400 said...

“https://www.hollywoodlanews.com/iran-shot-down-boeing-737-plane/“

In that article it sais in bold letters “This is an unconfirmed report.”

But Matt the “scientist is satisfied” because he’s not not a “Platonist”. Matt the hack is the best example of the one who knows nothing.

Matt should embrace that he’s the Platonist he so much loath.