Astrology

Is it time to accept that economic crashes are inevitable?

“THE only function of economic forecasting is to make astrology look respectable.” Stanford University economist Ezra Solomon is far from the only person to make this comparison – and the two activities are by some measures quite similar.

Both attempt to uncover patterns in human activity using models of dubious worth, both have proven incapable of reliably predicting the future, both are widely derided – and both are decidedly persistent.

Scientists have long sought to impose their own order on this messy sphere. Physicists have offered up their insights, which have been selectively adopted by economists – the guiding principle being that the models that have caught on tend to be simple, rather than accurate.

Now biologists want a go, with models incorporating swarming, neuroscience and psychology (see “After the crash, can biologists fix economics?“). Their complexities may well prove too unwieldy for them to gain traction.

It’s comforting to imagine that economic disasters can be avoided through smarter forecasting. But if the latest efforts reveal that this is still impossible, it would be better to accept this inevitability than deny it. Otherwise forecasting really will be no more credible than astrology.

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"THE only function of economic forecasting is to make astrology look respectable."