I was encouraged by Howard Marks’ article “Macromodels Offer Only the Illusion of Knowledge” (Markets Insight, Sept. 9). As a criticism of economic forecasting, his claims are irrefutable. In fact, some are obvious. In fact, the broader economy is too complex to predict accurately. Consumers may actually behave differently at different times, and the model cannot handle what has not been seen in modern times.
A much more interesting question is why the predictor continues to know all of the above. Marks does not believe that forecasters are scammers or charlatans, but rather that they think they are doing something useful. I tend to agree. But I wish he’d elaborated on the “self-interest” that seems to bias his self-evaluation of his work.
I dare say there are professional motives to perpetuate the illusion that economics is a science by using an elegant and abstract model. The prestige, prestige, and influence that such myths allow is undeniable. But far more damagingly, the ostensible neutrality of “economic science” provides a seemingly unshakable ideological cover for critics who (more realistically) emphasize power, inequality, and politics. increase.
Professor of Economics
Adelphi University, Garden City, New York, USA