I’m a big fan of economics. It’s probably not the most popular thing be a fan of these days, with so many failed predictions, opposite interpretations on the same subject and so on and so forth.
There are a ton of economist jokes going around (most of them true, most of them funny), like:
Economic forecasters assume everything, except responsibility.
In your first economics class, you learn that you should assume buyers have a “rational behavior” that “maximizes their utility” – meaning, they’ll always pick the best price on something that gives them the highest value. All microeconomics depends that you suspend your disbelief and take this for granted, despite the fact that you see, everyday, contrary examples. People are quick to disregard Economics as useless because of this, but I couldn’t disagree more.
The important point is to understand that Economics works in models, and is not an exact science. When you work in models, you try to control as many variables as possible, but can’t control them all.
Think about weather forecasting – it can get close, but it’s incredibly difficult to predict how bilions and bilions of particles will move and interact with each other. With our economies as integrated as they are today, there are bilions of moving parts as well. This doesn’t make forecasting useless, but we should understand its limitations.
I’ve been reading Good Economics for Hard Times, from Abhijit V. Banerjee and Esther Duflo (2019 Nobel Prize Winners) and they have a great quote on the job of the Economist:
Economists are more like plumbers; we solve problems with a combination of intuition grounded in science, some guesswork aided by experience, and a bunch of pure trial and error.Abhijit V. Banerjee and Esther Duflo
If only pundits understood that model prediction is never accurate, not by mistake, but by definition, we’ll all try to learn more from this field. Abhijit and Esther have been doing remarkable work in the developing world using RCTs (Randomized Controlled Trials) and other techniques to test real economic policy that influences governments.
They are a great example of what Economists are for.