'The real world is constantly changing, while mathematical models..'<blockquote> '
Financial Times columnist John Kay, writing yesterday about risk modelers, referred to them as “alchemists and quacks.” There are no control studies in economics, no way to hold everything else constant to determine the impact of one variable, no way to falsify conclusions that models spit out.On that basis, the analyst from Goldman Sachs, Taylor, Bernanke, Krugman, Greenspan (and countless others) are all quacks.
Why Model at All?There are no control studies because it is impossible to do them.
The real world is constantly changing, while mathematical models, Goldman's and Taylor's alike sit there as unmeasurable economic gibberish, when every component is subject to measurement errors and debate about what needs to be measured in the first place.
- Mish,
Goldman's Blood-Sucking Leeches Model, Money Multipliers, Macroeconomic Dark Ages, the Taylor Rule, and Nonsense from Trichet, March 03, 2011</blockquote>
'Physics used to mean investigating the nature and properties of matter and energy.'<blockquote>'Virtual models operating within computer algorithms have replaced direct observation in many ways. Models are used to support the existence of yet more models. Models are used to build other models, which, in turn, are used to "confirm" further models. Physics used to mean investigating the nature and properties of matter and energy. Instead, astrophysics has become an apprentice to mathematics.'
- Stephen Smith,
Andromeda's Mother, Mar 02, 2011 (
context)