Wednesday, February 03, 2010

Is Macroeconometric Modeling Fraud?

Arnold Kling points out that macroeconometric models could be viewed as being fraudulent given how they falsely claim to know that a certain policy will create for example 640,329 jobs. In reality, you can't know these things, particularly not with the precision that macroeconometric models claim to represent.

Strictly speaking though, it is not so much the models themselves that are fraudulent, but the assertions of its practitioners to represent scientific precision that are fraudulent, just like -to use Kling's analogy- it really wasn't the quack medicines that were fraudent, but the assertion of its sales men that they would cure diseases.