Can Mathematical models predict the economy?



16092013, 11:17 PM




RE: Can Mathematical models predict the economy?
I was a mechanical engineer by training and therefore somewhat versed in fluid dynamics. Until recently (about 1520 years ago) some problems were so complex that hand calculations became too difficult and physical models had to be used to find out how specific systems worked. Now with the greater power of computers many of those physical models are not necessary and computer simulations may be used. This mind you with easily defined constraints, fluid viscosity, physical structure, temperature, pressure, etc.
I also noted on occasion that traffic patterns could be modeled using fluid dynamics as a starting point. It has been done and does provide some insight into traffic patterns but there is a huge problem, humans. How does one predict the frequency that 4 idiots will line up on a 4 lane freeway for 5 minutes at the same speed, less than that legally allowed, and prevent others from passing them such that a freeway gets jammed up (yes I have seen that). I am afraid that those of you who seem to find fault with the assertion that mathematics cannot accurately predict how economics works are placing to much faith in getting all the variables in order, particularly the human one. I am not asserting that mathematics cannot be used to make some predictions on a micro level in economics. I do think that on a macro level mathematics starts running into the problem of too many variables. How does one model even simple things like the desire of someone to own a home. I realized some 40 years ago that housing prices where I live (the San Francisco Bay Area) were in excess of what people with an average income in the area could afford. Despite that housing prices increased dramatically in the intervening years to the point that only people who's income very much exceeded the average could afford them, yet people continue to buy housing, how can that be. Modeling human behavior such as economics is so complex that only simple systems can be successfully done. I think putting to much faith in mathematical modelling of economics on a macro scale is incorrect. 

16092013, 11:27 PM




RE: Can Mathematical models predict the economy?
(16092013 10:18 PM)frankksj Wrote: There is something about human free will that science doesn't understand. I'm a software coder and have worked with artificial intelligence algorithms. For decades it had been speculated that, since the brain is composed of "simple" connections, once processing power reached a certain threshold, computers also would become selfaware and develop free will. Over the past decades the amount of raw processing power in computers is something they never could have imagined. But, we're no closer to having selfaware artificial intelligence. The best examples, like IBM's Watson, are still following set instructions so that given the same inputs, the output will always be the same. A lowly termite has free will, but Watson does not. Chaos theory deals with systems that are highly sensitive to the initial conditions, so they seem random, however they are fully deterministic. Flipping a coin or rolling dice may seem random, but one could in theory calculate the result if one knew the exact initial position and momentum. The results of a coin or dice throw are in fact deterministic, but the precision of information one requires in order to calculate the result exactly is so high that the behavior approximates randomness. Markets can be modeled as "dynamical" systems where chaos theory can make useful predictions. Free will may very well simply be an illusion. Our brains at a chemical and electrical level may act like a chaotic system does, with all the results of inputs being fully deterministic, but practically nearly impossible to calculate exactly. However chaotic systems are NOT random and are open to mathematical investigation. 

17092013, 02:08 AM




RE: Can Mathematical models predict the economy?
(16092013 08:56 PM)cjlr Wrote:(16092013 08:14 PM)I and I Wrote: The 90's mathematical predictions of the economy failed miserably for the same reason they all wouldn't work. Mathematical models to predict behavior of organic matter or living species is not possible. You can only do it on individual subjects but not a whole species or a whole solar system etc. Science can only predict things when the variables of outside influence aren't counted. Like your electron. Nice try though. 

17092013, 02:15 AM




RE: Can Mathematical models predict the economy?
(17092013 02:08 AM)I and I Wrote:(16092013 08:56 PM)cjlr Wrote: I see you have simply reiterated your idiotic thesis. Some predictions are wrong, therefore all predictions are wrong. Keep reaching for that rainbow, champ. 

17092013, 04:27 AM




RE: Can Mathematical models predict the economy?
(17092013 02:08 AM)I and I Wrote:(16092013 08:56 PM)cjlr Wrote: I see you have simply reiterated your idiotic thesis. Some predictions are wrong, therefore all predictions are wrong. Keep reaching for that rainbow, champ. The influence of all possible variables which could impact an economic decision are accounted for, mathematically. You have no clue what you are talking about. But thanks for proving yet again, what am imbecile you are. You've obviously never even seen an econometric model. Insufferable knowitall.
Those who were seen dancing were thought to be insane by those who could not hear the music  Friedrich Nietzsche 

17092013, 06:29 AM




RE: Can Mathematical models predict the economy?
(17092013 04:27 AM)Bucky Ball Wrote:(17092013 02:08 AM)I and I Wrote: Science can only predict things when the variables of outside influence aren't counted. Accounting for every variable is not what we are talking about. We are talking about predicting (correctly) the variables that will take place. And no, mathematical models can't and didn't predict the current economic melt down. 

17092013, 06:33 AM




RE: Can Mathematical models predict the economy?
(17092013 06:29 AM)I and I Wrote:(17092013 04:27 AM)Bucky Ball Wrote: The influence of all possible variables which could impact an economic decision are accounted for, mathematically. You have no clue what you are talking about. But thanks for proving yet again, what am imbecile you are. You've obviously never even seen an econometric model. To clarify, are you saying that there are no current models that work or that no working model is possible? Skepticism is not a position; it is an approach to claims. Science is not a subject, but a method. 

17092013, 07:39 AM




RE: Can Mathematical models predict the economy?
(17092013 06:33 AM)Chas Wrote:(17092013 06:29 AM)I and I Wrote: Accounting for every variable is not what we are talking about. We are talking about predicting (correctly) the variables that will take place. And no, mathematical models can't and didn't predict the current economic melt down. I am saying that there is no mathematical model that can predict accurately events that involve organic matter. The only models that exist that do work are models that take an example out of it's environment or study one sample of a species. Example: a tomato plant can easily be predicted but the future of tomato plants in 100 years cannot. Humans are even much more difficult to predict as is the economy which is driven by human variables. 

14102013, 07:44 PM
(This post was last modified: 14102013 07:56 PM by Bucky Ball.)




RE: Can Mathematical models predict the economy?
Seems the Nobel Committee thinks economic models can predict some things.
http://www.chicagotribune.com/business/b...9551.story Insufferable knowitall.
Those who were seen dancing were thought to be insane by those who could not hear the music  Friedrich Nietzsche 

14102013, 11:00 PM




RE: Can Mathematical models predict the economy?
A human is difficult to predict in the short term. Many humans together are relatively predictable. Even a single human is relatively predictable in the long term.
http://www.aaai.org/ocs/index.php/AAAI/A.../4845/5275 Give me your argument in the form of a published paper, and then we can start to talk. 

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