Tags: Shiller | criticism | economists | unfair

Yale's Shiller: Criticism of Economists for Inaccurate Predictions 'Unfair'

By    |   Sunday, 18 January 2015 01:24 AM

Economists have taken a lot of heat for failing to forecast the 2008 financial crisis.

"But this criticism is unfair," Nobel laureate economist Robert Shiller, one who did predict trouble, writes on Project Syndicate.

"We do not blame physicians for failing to predict all of our illnesses. Our maladies are largely random, and even if our doctors cannot tell us which ones we will have in the next year, or eliminate all of our suffering when we have them, we are happy for the help that they can provide."

The situation is similar for economists, Shiller says. "Most economists devote their efforts to issues far removed from establishing a consensus outlook for the stock market or the unemployment rate. And we should be grateful that they do."

Shiller cites a new book by Robert Litan of the Brookings Institution, "Trillion Dollar Economists," which states that economists "created trillions of dollars of income and wealth for the United States and the rest of the world."

A lot of guesswork obviously went into calculating that number. But, "Litan’s conclusion is plausible indeed," Shiller writes.

"The economics profession has produced an enormous amount of extremely valuable work, characterized by a serious effort to provide genuine evidence."

Meanwhile, many economists see deflation ahead in this country.

The Wall Street Journal's survey of 66 economists produced an average forecast for only 0.5 percent consumer price inflation in the 12 months through June, with 25 percent of the economists expecting deflation during that period—as much as 1 percent deflation.

The trend may already have begun, with the government reporting Friday that consumer prices fell 0.4 percent in December, the biggest drop in six years. That put the gain for all of 2014 at just 0.8 percent, the smallest 12-month advance since October 2009.

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Economists have taken a lot of heat for failing to forecast the 2008 financial crisis. But this criticism is unfair, Nobel laureate economist Robert Shiller, one who did predict trouble, writes on Project Syndicate.
Shiller, criticism, economists, unfair
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2015-24-18
Sunday, 18 January 2015 01:24 AM
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