I think Sumner’s being tongue-in-check, but here’s his genuinely good idea for a new journal:
Most economists obviously disagree with me. The top economists are
constantly making predictions that violate the EMH. OK, then why not
set up a new journal, the Journal of Economic Predictions.
Each month they would publish 25 to 30 short predictions about the
economy or asset prices. After 30 years we’d have 10,000 predictions,
a pretty good track record of whether economists actually had the
ability to make useful predictions. Those who think my skepticism is
misplaced could set up a mutual fund that invested a little bit of
money on the basis of each JEP prediction. With so many predictions it
would be highly diversified. If economists’ predictions are superior
to dart tossing, then the mutual fund would outperform index funds.
Yesterday my colleague Dan Klein presented a new paper on the importance of the allegory of communication in economics. My main objection: Comparing market prices to communication is unfair to market prices. Much, if not most, “communication” is fruitless blather. A Journal of Economic Predictions, in contrast, would be news we could use.
READER COMMENTS
genghis
May 6 2010 at 1:18pm
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infopractical
May 6 2010 at 2:15pm
This is exactly the kind of idea that is going to irk economists who make their living pushing ideological beliefs with no real world viability. It’s a great idea, but it’s been discussed before and the people who discuss it seriously tend to just start hedge funds. Who would find this kind of experiment valuable and interesting who would not just take the leap to managing the applications of their own ideas?
jsalvati
May 6 2010 at 2:59pm
You know, that really is a good idea. It should also serve as an official arena for interesting bets.
Nick
May 6 2010 at 3:37pm
Sounds like Google’s future machine which aggregates and categorizes predictions of future trends/events.
blink
May 6 2010 at 10:02pm
Yes, this would provide superior information and I hope to see it happen. I think you unfairly dismiss conversation for failing to convey information, though. If you agree with Robin that “talk isn’t about info”, calling it “useless blather” makes about as much sense as saying eating is “mindless chomping” (as it might well be if eating were about nutrition)!
Jeremy, Alabama
May 7 2010 at 7:50am
I really like this suggestion.
Predictions should include the model that was used. I care less about the predictive power of economists than the predictive power of models.
In fact, if models are “open-source”, you can do this yourself, on your blog. Pick some specific numerical prediction that 3 or 4 models disagree on, get the model author to agree that you applied the model correctly, and track it.
Peter G. Klein
May 7 2010 at 10:48am
Bryan, on the analogy between communication and exchange, you’ll appreciate this passage from Bartley’s Unfathomed Knowledge, Unmeasured Wealth:
Scott Sumner
May 7 2010 at 12:04pm
There are times when I wished I had held my “tongue-in-check”. But this was more tongue-in-cheek.
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