Should we trust economists?

[ASUG8]

It seems like every time a group of economists releases a number (actual or forecast) it has to be revised. It's one thing if you're providing a forecast, but if you have the actual data (as you would think they would have nearly three months after the first quarter of '13 ended) why are they having to revise an actual result? Economists are like weather forecasters, except about 25% as accurate.

The U.S. economy grew at an annual rate of 1.8 percent in the first three months of the year, significantly slower than first thought. The steep revision was mostly because consumers spent less than previously estimated, a sign that higher taxes could be having a deeper impact on growth.

The Commerce Department revised its growth estimate for the January-March quarter down from a 2.4 percent annual rate. The revised rate was still faster than the 0.4 percent rate in the October-December quarter.

Economists had thought growth in the April-June quarter would be 2 percent or less, although the revision will likely change those estimates. They had also expected growth to strengthen in the second half of this year.

http://www.nbcnews.com/business/us-econ ... 6C10454148" onclick="window.open(this.href);return false;


This isn't intended to be a political post, but I could see it going that way hence the forum placement.

[houndawg]

It seems like every time a group of economists releases a number (actual or forecast) it has to be revised. It's one thing if you're providing a forecast, but if you have the actual data (as you would think they would have nearly three months after the first quarter of '13 ended) why are they having to revise an actual result? Economists are like weather forecasters, except about 25% as accurate.

The U.S. economy grew at an annual rate of 1.8 percent in the first three months of the year, significantly slower than first thought. The steep revision was mostly because consumers spent less than previously estimated, a sign that higher taxes could be having a deeper impact on growth.

The Commerce Department revised its growth estimate for the January-March quarter down from a 2.4 percent annual rate. The revised rate was still faster than the 0.4 percent rate in the October-December quarter.

Economists had thought growth in the April-June quarter would be 2 percent or less, although the revision will likely change those estimates. They had also expected growth to strengthen in the second half of this year.

http://www.nbcnews.com/business/us-econ ... 6C10454148" onclick="window.open(this.href);return false;


This isn't intended to be a political post, but I could see it going that way hence the forum placement.

Economists make astrologers look good.

[GannonFan]

Economics isn't a science, or at least it's not understood enough to rise to the level of what we would consider to be scientific. It's more psychology than anything else, but with more opinions.

[blueballs]

Do I trust economists? No.

Do I trust economists more than I trust Obama's cabinet departments to report accurate economic statistics? Absolutely.

Do I trust Bernanke and Cordray? Hell fucking no!!!!!!!!!!!!!!!!!!!

That pretty much sums it up.

[houndawg]

Economics isn't a science, or at least it's not understood enough to rise to the level of what we would consider to be scientific. It's more psychology than anything else, but with more opinions.

Just like astrology.

[AZGrizFan]

There's a reason why you never see a one-armed economist.

[Ivytalk]

There's a reason why you never see a one-armed economist.

Same reason you never see a one-armed lawyer.

[AZGrizFan]

Three friends--a chemist, a physicist and an economist, are stranded on a small island in the middle of the Pacific, with no food, no water and no shelter. A can of beans washes up on shore, but they have no way to open it.

The chemist says "put the can on a rock, let the sun heat the contents inside and it will cause the top of the can to come off and we can then eat the beans."

The physicist says "no, no, no...the sun will heat the metal of the can, causing it to expand and soften, and we'll then be able to get into the can to eat the beans."

The economist stops them both and simply says "You two are always making things so DIFFICULT. Just assume a can opener."

[houndawg]

Three friends--a chemist, a physicist and an economist, are stranded on a small island in the middle of the Pacific, with no food, no water and no shelter. A can of beans washes up on shore, but they have no way to open it.

The chemist says "put the can on a rock, let the sun heat the contents inside and it will cause the top of the can to come off and we can then eat the beans."

The physicist says "no, no, no...the sun will heat the metal of the can, causing it to expand and soften, and we'll then be able to get into the can to eat the beans."

The economist stops them both and simply says "You two are always making things so DIFFICULT. Just assume a can opener."

[CID1990]

Three friends--a chemist, a physicist and an economist, are stranded on a small island in the middle of the Pacific, with no food, no water and no shelter. A can of beans washes up on shore, but they have no way to open it.

The chemist says "put the can on a rock, let the sun heat the contents inside and it will cause the top of the can to come off and we can then eat the beans."

The physicist says "no, no, no...the sun will heat the metal of the can, causing it to expand and soften, and we'll then be able to get into the can to eat the beans."

The economist stops them both and simply says "You two are always making things so DIFFICULT. Just assume a can opener."

Awesome


Sent from the center of the universe.

[GrizFanStuckInUtah]

Three friends--a chemist, a physicist and an economist, are stranded on a small island in the middle of the Pacific, with no food, no water and no shelter. A can of beans washes up on shore, but they have no way to open it.

The chemist says "put the can on a rock, let the sun heat the contents inside and it will cause the top of the can to come off and we can then eat the beans."

The physicist says "no, no, no...the sun will heat the metal of the can, causing it to expand and soften, and we'll then be able to get into the can to eat the beans."

The economist stops them both and simply says "You two are always making things so DIFFICULT. Just assume a can opener."

[JohnStOnge]

No. I've followed it for many years and I see no reason to believe predictions of economists are any better than using one of the 8 balls you ask questions then shake to see which answer floats up. Or maybe a Ouija board.

Sometimes I wonder why we even have the profession. It's kind of like having witch doctors.

[JohnStOnge]

It's more psychology than anything else,

You know you're really on to something there. I've never put it in exactly those terms but I've always believed that what economists say affects peoples' behavior then that affects the economy. If they say things that make it sound like things are bad I think it can become like a self fulfilling prophecy. And visa versa.

But even then I don't see a lot of evidence that their predictions are better than random chance. Flipping a coin. 8 ball with the little window. Quija board.

I honestly think we'd be better off if no economic statistics were ever reported and no economic predictions were ever made. I mean, I have fun sometimes with the statistics. But I'd be willing to sacrifice that in exchange for them not even trying to estimate and report what inflation is, what the GDP is, what the unemployment rate is, what all the other stuff is, and trying to predict what's going to happen in the future. Just let life go on.

[ASUG8]

I honestly think we'd be better off if no economic statistics were ever reported and no economic predictions were ever made. I mean, I have fun sometimes with the statistics. But I'd be willing to sacrifice that in exchange for them not even trying to estimate and report what inflation is, what the GDP is, what the unemployment rate is, what all the other stuff is, and trying to predict what's going to happen in the future. Just let life go on.

My bigger problem is that they can't decide what happened in the past. Seems like that would be relatively easy.

[AZGrizFan]

I honestly think we'd be better off if no economic statistics were ever reported and no economic predictions were ever made. I mean, I have fun sometimes with the statistics. But I'd be willing to sacrifice that in exchange for them not even trying to estimate and report what inflation is, what the GDP is, what the unemployment rate is, what all the other stuff is, and trying to predict what's going to happen in the future. Just let life go on.

My bigger problem is that they can't decide what happened in the past. Seems like that would be relatively easy.

[CAA Flagship]

A mathematician, an accountant and an economist apply for the same job.

The interviewer calls in the mathematician and asks "What do two plus two equal?" The mathematician replies "Four." The interviewer asks "Four, exactly?" The mathematician looks at the interviewer incredulously and says "Yes, four, exactly."

Then the interviewer calls in the accountant and asks the same question "What do two plus two equal?" The accountant says "On average, four - give or take ten percent, but on average, four."

Then the interviewer calls in the economist and poses the same question "What do two plus two equal?" The economist gets up, locks the door, closes the shade, sits down next to the interviewer and says, "What do you want it to equal"?

[CAA Flagship]

A civil engineer, a chemist and an economist are traveling in the countryside. Weary, they stop at a small country inn. "I only have two rooms, so one of you will have to sleep in the barn," the innkeeper says. The civil engineer volunteers to sleep in the barn, goes outside, and the others go to bed. In a short time they're awakened by a knock. It's the engineer, who says, "There's a cow in that barn. I'm a Hindu, and it would offend my beliefs to sleep next to a sacred animal." The chemist says that, OK, he'll sleep in the barn. The others go back to bed, but soon are awakened by another knock. It's the chemist who says, "There's a pig in that barn. I'm Jewish, and cannot sleep next to an unclean animal." So the economist is sent to the barn. It's getting late, the others are very tired and soon fall asleep, Bu they're awakened by an even louder knocking. They open the door and are surprised by what they see: It's the cow and the pig

[Pwns]

You know you're really on to something there. I've never put it in exactly those terms but I've always believed that what economists say affects peoples' behavior then that affects the economy. If they say things that make it sound like things are bad I think it can become like a self fulfilling prophecy. And visa versa.

But even then I don't see a lot of evidence that their predictions are better than random chance. Flipping a coin. 8 ball with the little window. Quija board.

I honestly think we'd be better off if no economic statistics were ever reported and no economic predictions were ever made. I mean, I have fun sometimes with the statistics. But I'd be willing to sacrifice that in exchange for them not even trying to estimate and report what inflation is, what the GDP is, what the unemployment rate is, what all the other stuff is, and trying to predict what's going to happen in the future. Just let life go on.

Do I dare make a parallel with climate science? I think I will. Both climate scientists and macroeconomists make predictions and try to explain past trends, but overall the entire system is just too chaotic and complex to reasonably predict. At least within macroeconomics economists will disagree and debate the causes of certain events rather than all just agreeing with the same hypothesis.

By the way, has anyone heard of the cat that beat professional stock brokers in picking stocks?

http://www.forbes.com/sites/frederickal ... k-picking/" onclick="window.open(this.href);return false;

[kalm]

You know you're really on to something there. I've never put it in exactly those terms but I've always believed that what economists say affects peoples' behavior then that affects the economy. If they say things that make it sound like things are bad I think it can become like a self fulfilling prophecy. And visa versa.

But even then I don't see a lot of evidence that their predictions are better than random chance. Flipping a coin. 8 ball with the little window. Quija board.

I honestly think we'd be better off if no economic statistics were ever reported and no economic predictions were ever made. I mean, I have fun sometimes with the statistics. But I'd be willing to sacrifice that in exchange for them not even trying to estimate and report what inflation is, what the GDP is, what the unemployment rate is, what all the other stuff is, and trying to predict what's going to happen in the future. Just let life go on.

Do I dare make a parallel with climate science? I think I will. Both climate scientists and macroeconomists make predictions and try to explain past trends, but overall the entire system is just too chaotic and complex to reasonably predict. At least within macroeconomics economists will disagree and debate the causes of certain events rather than all just agreeing with the same hypothesis.

I think it's a very solid parallel. But both disciplines are immensely important (not to mention interesting) and a bunch of really smart and wealthy people will pay handsomely to bet on which theory/forecast is right.

The adjustments in economic statistics obviously result from the same complexity. There are a shit ton of numbers that have to be reported from both the public sector and the private sector to determine things like GDP. I'm guessing the preliminary numbers are driven by a smaller sample size as not everybody reports in a timely fashion, not to mention the reported numbers probably come from a variety of sources. So they take what they have initially and then as all the numbers come through and mistakes are caught and corrected, there's always going to be a need for adjustment.

But to answer the thread question...hell no. You're a fool if you don't question everything in life.

[AZGrizFan]

A civil engineer, a chemist and an economist are traveling in the countryside. Weary, they stop at a small country inn. "I only have two rooms, so one of you will have to sleep in the barn," the innkeeper says. The civil engineer volunteers to sleep in the barn, goes outside, and the others go to bed. In a short time they're awakened by a knock. It's the engineer, who says, "There's a cow in that barn. I'm a Hindu, and it would offend my beliefs to sleep next to a sacred animal." The chemist says that, OK, he'll sleep in the barn. The others go back to bed, but soon are awakened by another knock. It's the chemist who says, "There's a pig in that barn. I'm Jewish, and cannot sleep next to an unclean animal." So the economist is sent to the barn. It's getting late, the others are very tired and soon fall asleep, Bu they're awakened by an even louder knocking. They open the door and are surprised by what they see: It's the cow and the pig