Posted by: Dirk | January 26, 2010

Good thinking

I mined this from comments on a blog post at Worthwile Canadian Initiative:

Basically, this is not science. It is an attempt to create formulas to predict human behaviour. Sure, if everyone uses exactly the same formula, you get the same outcome. Self fulfilling. And if more and more of the Wall Street traders go to the same biz schools and are taught the same formulaic predictors of future value of an entity, you get convergence.

Formulas are excellent at predicting past behaviour. They are not, however science, and therefore are not subjectable to the same sort of testable predictions. Might as well work on a perpetual motion machine.

Well, this is so easy to understand that it cannot possibly be economic science. Or can it?

p.s.: The original article is excellent, too.

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