Sunday , November 24 2024
Home / Lars P. Syll / Econometric self-deception

Econometric self-deception

Summary:
Thus we have “econometric modelling”, that activity of matching an incorrect version of [the parameter matrix] to an inadequate representation of [the data generating process], using insufficient and inaccurate data. The resulting compromise can be awkward, or it can be a useful approximation which encompasses previous results, throws’ light on economic theory and is sufficiently constant for prediction, forecasting and perhaps even policy. Simply writing down an “economic theory”, manipulating it to a “condensed form” and “calibrating” the resulting parameters using a pseudo-sophisticated estimator based on poor data which the model does not adequately describe constitutes a recipe for disaster, not for simulating gold! Its only link with alchemy is self-deception.

Topics:
Lars Pålsson Syll considers the following as important:

This could be interesting, too:

Matias Vernengo writes Elon Musk (& Vivek Ramaswamy) on hardship, because he knows so much about it

Lars Pålsson Syll writes Klas Eklunds ‘Vår ekonomi’ — lärobok med stora brister

New Economics Foundation writes We need more than a tax on the super rich to deliver climate and economic justice

Robert Vienneau writes Profits Not Explained By Merit, Increased Risk, Increased Ability To Compete, Etc.

Thus we have “econometric modelling”, that activity of matching an incorrect version of [the parameter matrix] to an inadequate representation of [the data generating process], using insufficient and inaccurate data.Econometric self-deception The resulting compromise can be awkward, or it can be a useful approximation which encompasses previous results, throws’ light on economic theory and is sufficiently constant for prediction, forecasting and perhaps even policy. Simply writing down an “economic theory”, manipulating it to a “condensed form” and “calibrating” the resulting parameters using a pseudo-sophisticated estimator based on poor data which the model does not adequately describe constitutes a recipe for disaster, not for simulating gold! Its only link with alchemy is self-deception.

David Hendry

Lars Pålsson Syll
Professor at Malmö University. Primary research interest - the philosophy, history and methodology of economics.

Leave a Reply

Your email address will not be published. Required fields are marked *