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Yes, and it is important to distinguish a theoretical construct intended to predict patterns of results, from a predictive scheme that gathers and crunches data, outputting numbers and dates. To be a falsifiable scientific theory, the former need only predict what patterns of behavior may occur (or equivalently, what patterns won't occur).

The idea that economic theory is necessarily about prediction, like celestial mechanics applied to planets, is the source of much confusion. "Economists can't predict recessions, so what do they know?" The answer is that, in principle, they could know a lot, yet never predict a price or an economic fluctuation.

That economists commonly think they know many things that aren't actually true is a different issue.

Words and ideas I offer here may be used freely and without attribution.

by technopolitical on Sun Nov 11th, 2007 at 02:34:49 PM EST
[ Parent ]
Forget about prediction. If the demand and supply curves cannot be observed the theory doesn't even describe what is observed.

We have met the enemy, and he is us — Pogo
by Migeru (migeru at eurotrib dot com) on Sun Nov 11th, 2007 at 04:27:41 PM EST
[ Parent ]

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