Tuesday, August 02, 2016

Be careful

Here is the always wise Matt Ridley talking about experts and their forecasting skills (lack of). He cites the Philip Tetlock project.

We have a natural human interest in the future; we have to reconcile this with the fact that we have no clue (can have no clue) about the distant future. We are routinely asked to make large sacrifices to avoid the consequences of climate change in as many as 100 years in the future. There has never been a serious 100-year technology forecast. I doubt that there will ever be one. (I just made a safe forecast.)

It is an entirely different matter if private parties make bets with their own time and money. If they choose to putter around laboratories, pursuing wild ideas, good for them. It is a different matter when they hector others to do so with their time and money -- or via their influence on those with the power to tax.

One can never know enough history. It's also good to know a lot of economic history; my taste runs to Deirdre McCloskey's way of combining the two fields. But do these oceans of scholarship allow one to make forecasts? For the short run and in terms of broad patterns only. And even then, be careful.

If cities were to implement one-stop developer approval processes in place of the drawn out and expensive mess we now have, there would be more housing, greater affordability and also more mobility. These are all to the good. But my forecast lacks a "when" and a "where".

In the run-up to 2008, most economists were still celebrating the Great Moderation. Were any of them in the room when Queen Elizabeth asked the obvious question? Be careful.