I'm proud that the Nobel prize for economics was awarded to two Americans yesterday and salute Thomas Sargent & Christopher Sims on their accomplishment.
For decades, I have watched the profession of economics sink into the black hole of econometrics, which is an almost religious belief that everything can be quantified. If only we could get more & better data, as well as bigger & faster computers, we could predict how many people will have eggs & bacon for breakfast next Wednesday. First, that degree of accuracy will never be available, and second . . . who cares? Rational computers cannot calculate irrational human behavior, not even statistically.
There is now a renegade branch of economics, trying to bring the profession back out of the black hole. They believe economics is many things, including behavioral, econometric, and random probabilities. Known as the Institute of New Economic Thinking or INET, their website is http://ineteconomics.org/
Yesterday's selection suggests a turning point in this evolution of the profession. For the first time, the honorees are econometricians who are focused on the "real world" instead of a computerized fantasy-world.
I'm proud of America for capturing the award, and I'm proud of my profession for taking a step out of the darkness. U.S.A. . . U.S.A.
For decades, I have watched the profession of economics sink into the black hole of econometrics, which is an almost religious belief that everything can be quantified. If only we could get more & better data, as well as bigger & faster computers, we could predict how many people will have eggs & bacon for breakfast next Wednesday. First, that degree of accuracy will never be available, and second . . . who cares? Rational computers cannot calculate irrational human behavior, not even statistically.
There is now a renegade branch of economics, trying to bring the profession back out of the black hole. They believe economics is many things, including behavioral, econometric, and random probabilities. Known as the Institute of New Economic Thinking or INET, their website is http://ineteconomics.org/
Yesterday's selection suggests a turning point in this evolution of the profession. For the first time, the honorees are econometricians who are focused on the "real world" instead of a computerized fantasy-world.
I'm proud of America for capturing the award, and I'm proud of my profession for taking a step out of the darkness. U.S.A. . . U.S.A.
