From: Billy Brown (bbrown@conemsco.com)
Date: Tue Mar 16 1999 - 06:37:22 MST
The Baileys wrote:
> But using
> Chaitin's definition of complexity, I suspect the "theory of
> everything" for
> economics will be more complex (i.e., longer) than the "theory of
> everything" for physics. I believe it will have more variables, more
> echelons, more overall complexity. Perhaps the success rate
> of economic
> predictions is similar to that of meteorologists for a
> reason, both subjects
> attempt to model an extremely complex interplay between a
> host of agents..
I would definitely agree with you that the economy is far more complex (and
thus more difficult to predict) than anything physicists have been able to
model. After all, physics models don't have to deal with sentient beings as
a fundamental particle!
However, IMO the public skepticism of economists is entirely justified for
this very reason. We listen to physicists because they have a long history
of making precise, accurate predictions. We listen to meteorologists
because they admit they can't be especially accurate, but they can tell us
what the odds are. We largely ignore economists because we remember the
last 20 guys who claimed to be able to make physicist-like predictions, but
in fact weren't even as good as the weather man.
The public gave economists their chance. We've seen their advice have a
profound effect on public policy for most of the 20th century. But if
you're wrong often enough, people eventually start to notice. If economists
want to be taken more seriously again, they need to:
1) Reign in these people who claim to be able to make detailed predictions.
Any educated person knows they can't, and listening to them simply
undermines the credibility of the entire field.
2) When a broad claim can be made, use the necessary probabilistic language
to make it clear you aren't over predicting (i.e. "cutting taxes generally
encourages economic growth" rather than "lowering the top marginal income
tax rate to 24% would increase GNP growth by 0.4% per year").
3) Start building a track record of success in areas that are simple enough
to yield to analysis. There is already good work being done here, but it is
overshadowed in the public mind by the government-policy hucksters.
Billy Brown, MCSE+I
bbrown@conemsco.com
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