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akira_akuma
Φύσις κρύπτεσθαι ὕψιστος φιλεῖ


Registered: 08/28/09
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A Thread About Econometrics
#25214688 - 05/19/18 01:01 PM (5 years, 9 months ago) |
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https://en.wikipedia.org/wiki/Criticisms_of_econometrics
Quote:
Looking primarily at macroeconomics, Lawrence Summers has criticized econometric formalism, arguing that "the empirical facts of which we are most confident and which provide the most secure basis for theory are those that require the least sophisticated statistical analysis to perceive." He looks at two highly praised macroeconometric studies (Hansen & Singleton (1982, 1983), and Bernanke (1986)), and argues that while both make brilliant use of econometric methods, both papers do not really prove anything that future theory can build on. Noting that in the natural sciences, "investigators rush to check out the validity of claims made by rival laboratories and then build on them," Summers points out that this rarely happen in economics, which to him is a result of the fact that "the results [of econometric studies] are rarely an important input to theory creation or the evolution of professional opinion more generally." To Summers:[6]
"Successful empirical research has been characterized by attempts to gauge the strength of associations rather than to estimate structural parameters, verbal characterizations of how causal relations might operate rather than explicit mathematical models, and the skillful use of carefully chosen natural experiments rather than sophisticated statistical technique to achieve identification."
*underlined and bold for my own emphasis
Quote:
Like other forms of statistical analysis, badly specified econometric models may show a spurious correlation where two variables are correlated but causally unrelated. Economist Ronald Coase is widely reported to have said "if you torture the data long enough it will confess".[1] McCloskey argues that in published econometric work, economists tend to rely excessively on statistical techniques and often fail to use economic reasoning for including or excluding variables.[2]
Economic variables are not readily isolated for experimental testing, but Edward Leamer argues that there is no essential difference between econometric analysis and randomized trials or controlled trials provided judicious use of statistical techniques eliminates the effects of collinearity between the variables.[3]
Economists are often faced with a high number of often highly collinear potential explanatory variables, leaving researcher bias to play an important role in their selection. Leamer argues that economists can mitigate this by running statistical tests with different specified models and discarding any inferences which prove to be "fragile", concluding that "professionals ... properly withhold belief until an inference can be shown to be adequately insensitive to the choice of assumptions".[4]
Quote:
GordonTullock -- "A Comment on Daniel Klein's 'A Plea to Economists Who Favor Liberty'", Eastern Economic Journal, Spring 2001, note 2 (Text: "As Ronald Coase says, 'if you torture the data long enough it will confess'." Note: "I have heard him say this several times. So far as I know he has never published it.")
https://en.wikipedia.org/wiki/Gordon_Tullock
http://www.deirdremccloskey.com/docs/pdf/Article_179.pdf
https://en.wikipedia.org/wiki/Lucas_critique
^ contains links to important reading
https://www.journals.uchicago.edu/doi/10.1086/260580
Even if there is an agreed-upon, fixed social objective function and policymakers know the timing and magnitude of the effects of their actions, discretionary policy, namely, the selection of that decision which is best, given the current situation and a correct evaluation of the end-of-period position, does not result in the social objective function being maximized. The reason for this apparent paradox is that economic planning is not a game against nature but, rather, a game against rational economic agents. We conclude that there is no way control theory can be made applicable to economic planning when expectations are rational.
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paradoxlost
Stranger

Registered: 11/28/17
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Re: A Thread About Econometrics [Re: akira_akuma]
#25216848 - 05/20/18 03:46 PM (5 years, 9 months ago) |
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From my limited understanding of economics, understanding human nature and what is driving market expression is more important than understanding market trends. For instance, going to war is not necessarily something that can be perceived via running numbers on the supply and demand of steel or fiber, but reading a newspaper will tell you that .
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akira_akuma
Φύσις κρύπτεσθαι ὕψιστος φιλεῖ


Registered: 08/28/09
Posts: 82,455
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Re: A Thread About Econometrics [Re: paradoxlost]
#25217104 - 05/20/18 05:51 PM (5 years, 9 months ago) |
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i don't need to be told that. some people do, however, should understand how statistics can be used to promote results, right? i mean, if you have a predilection in mind, to be realized, you can reify it through skewing data to portray the results that incline toward said data being "true" for x, then infer that it'll lead result y, that result (a predilection) being deemed "advantageous" (insert reason here).
this kind of portrayal of information over the wont for...call it "freedom"...freedom- yes- can be used to lead results that are endeavored upon by "economists"- just as laws are endeavored upon by lawyers in congress.
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