Re: social science sort of counts... economics gets a nobel prize, that means something, right?
Posted by Uncle Al on Jun 16, 2003 at 17:03
(68.5.243.16)Re: social science sort of counts... economics gets a nobel prize, that means something, right? (Andy™)
Macroeconomics is no better than psychology - a bad guess given in a good cause. Do you think the US voluntarily entered into disasterous 1970s stagflation? We sure did! The US listened to Economics Nobel Laureat Milton Friedman. His "Boys from Chicago" did a bang up job in Chile, too. Angry people are still after Augusto Pinochet's ass 40 years later.
Tell me what the Dow-Jones, Nasdaq, or Standard and Poor's averages will close at tomorrow based on the past 200 years' observations (or whatever. Read chicken entrails if you like). Short of that, all you have is retrospective curve fitting.
Extrapolation from a fitted model containing unquantified (unknown!) variables is notoriously wonky. Look up "heteroskedasticity" and learn some humility.Remember what happened to Fischer Black, Robert Merton, Myron Scholes... and their Nobel Prize didn't save them. Black died; Merton and Scholes got the Prize and then shafted their investors to the tune of nearly a $trillion in red ink. Heteroskedasticity doesn't begin to embrace a $1 trillion screw-up.
Nice set of classnotes you have there! Note that your profs earn their livings teaching not investing. "8^>)
--
Uncle Al
http://www.mazepath.com/uncleal/eotvos.htm
(Do something naughty to physics)
Follow Ups:
- Re: social science sort of counts... economics gets a nobel prize, that means something, right? Andy™ 17/6 13:05 (1)
- Re: social science sort of counts... economics gets a nobel prize, that means something, right? uunhubn b 25/6 07:13 (0)