Why Can’t We Make Better Economic Predictions?
Question/Comment: Why isn’t economics more of a science? I’ve seen pundits on TV say the Great Lesson of the Great Depression is to have jobs programs and get people back to work, but other pundits say the Depression would’ve been over much quicker except for all that government intervention. I’ve seen people say that we should cut taxes to stimulate economic growth, and others say we should raise (or at least not lower) taxes to target where that economic growth will go. I just can’t believe we still haven’t learned what the lessons of the 1930’s should be.
So why is there so much ideology driving these decisions? Why can’t economists point to concrete examples of what’s happened in the past, or have computer models predicting what will happen in the future?
Paul Solman: Can a computer model predict what YOU will do in the future, Tim? What I will do? What you will do as a RESULT of what I do? Multiply that by everyone, and you can see the problem.
Economics isn’t more of a science because its subject is human behavior. And for the foreseeable future, that remains too complex to predict. I’ve long been impressed by a phrase of Noam Chomsky’s. The great linguistics scholar (and controversial left-wing commentator) used to refer to economics and its fellow disciplines as the “social so-called sciences.”