> […] and no matter how much modelling is done it can't reliably predict future outcomes.
A physicists once remarked that his job would been much harder if particles had free will. But that is exact economists have to do: predict what humans will do. There is an entire sub-field of study on the non-rationality of people and how it feeds into how that effects money, finance, and economies:
But there have been instances of models working. When QE started a group of folks made predictions:
> We believe the Federal Reserve’s large-scale asset purchase plan (so-called “quantitative easing”) should be reconsidered and discontinued. We do not believe such a plan is necessary or advisable under current circumstances. The planned asset purchases risk currency debasement and inflation, and we do not think they will achieve the Fed’s objective of promoting employment.
Another group of folks (often called "Keynesian") made different predictions based on their model(s) / understanding of how things work.. One turned out correct and other incorrect in their predictions.
See also predictions about "tax cuts pay for themselves":
> But that is exact economists have to do: predict what humans will do
Economists have agency. They don't have to predict what humans will do. They believe they can predict it, attempt to make their predictions, then claim that's what will happen.
That works in reverse as well, attempting to predict why humans did what they did in the past and then attempt to attribute those predictions as an explanation of quantified economic indicators.
In both case, past behavior and future behavior, their predictions are untestable. How is that scientific?
> Economists have agency. They don't have to predict what humans will do. They believe they can predict it, attempt to make their predictions, then claim that's what will happen.
Economists study the economy which is made of… a bunch of humans doing stuff with money.
> In both case, past behavior and future behavior, their predictions are untestable. How is that scientific?
What is this not testable about:
> The planned asset purchases risk currency debasement and inflation […]
Was there (USD) currency debasement? Was there US inflation? No? The predictions were wrong. The same day it was published (in the WSJ) there were critiques about it, e.g.:
When QE2 went forward and was about to stop there were many predictions (generally involving piles of money), some of which were accurate and others less so:
Do you have a model that tries to explain what tariffs with do to the USD? You can make a prediction and win/lose a lot of money buy shorting/longing the dollar.
That's simple, QE wasn't tested in any scientifically valid study. They made predictions of what QE may do, they enacted QE policies in an uncontrolled economy with no control group, and stuff happened. Afterwards they attempted to read the tea leaves and claim what precisely causes economic changes.
That isn't scientific at all. That also doesn't mean they were wrong, you can absolutely be right when you go off educated guesses or plain old intuition. My claim is that how economics is studied is not scientific in that it never has, and never can, follow the scientific method.
A physicists once remarked that his job would been much harder if particles had free will. But that is exact economists have to do: predict what humans will do. There is an entire sub-field of study on the non-rationality of people and how it feeds into how that effects money, finance, and economies:
* https://en.wikipedia.org/wiki/Behavioral_economics
But there have been instances of models working. When QE started a group of folks made predictions:
> We believe the Federal Reserve’s large-scale asset purchase plan (so-called “quantitative easing”) should be reconsidered and discontinued. We do not believe such a plan is necessary or advisable under current circumstances. The planned asset purchases risk currency debasement and inflation, and we do not think they will achieve the Fed’s objective of promoting employment.
* https://www.hoover.org/research/open-letter-ben-bernanke
Another group of folks (often called "Keynesian") made different predictions based on their model(s) / understanding of how things work.. One turned out correct and other incorrect in their predictions.
See also predictions about "tax cuts pay for themselves":
* https://en.wikipedia.org/wiki/Tax_Cuts_and_Jobs_Act
* https://en.wikipedia.org/wiki/Kansas_experiment
The fact that people ignore the results of the experiments is not a failing of the academic field.