Michael,

Re trend following PHD’s:

1) If there was to be what theses would you want to see?

2) Do you think it would ever get funding? If so who?

RJC

Prashanth, the point is?

You said,

>> Try and find the PhD academic work on trend following

I said, there are PhD’s in TF too and gave a couple of examples. Has to mean nothing or can mean everything. Depends upon how the reader takes it.

Mises, Hayek, Rothbard all earned PhD’s or European equivalents – they didn’t build their careers on rationalizing their gov’ts fairy-tale campaign promises.
Problem is that the standard of fact & logic in today’s universities is degraded; & the academic culture, of course, would probably expel such men, were they students today.
Today’s credentialed economists now have ego issues admitting the stupidity of fiat currency, fractional reserve banking, accounting rules that conceal off-book accounts, unsecured debt with enforced legal tender, in a word – all the same basic fiddles that once gave monarchs seignorage privileges, clipping coins, basically.
So, focusing on econometrics, exotic statistical models (using assumptions rather than data as premises), & outraged bluster will give them cover?

Jeff, you seem to be saying that economists possess an expertise in the accurate prediction of future prices, along with other pertinent factors.
Where’s the evidence for this, especially recently?
As to “blind acceptance,” it’s worse – knowing the selectivity & slants of the published figures, the profession uses those numbers uncritically, since it’s not only easier (why do real research?), it avoids challenging both the gov’t authorities who sponsor the “data,” & those private-sector firms, favored by the gov’t, who are big employers of these same economists.
Didn’t Prof. Romer just resign as a Presidential advisor, in apparent embarrassment, having promised a U.S. unemployment level of 8% (a weak achievement, even had it happened)?
Her prior writings (Harvard Univ. Econ. Dept.) typically opposed most of what she promised to do, once “graduating” directly into a favored gov’t position.
Establishment status is seductive; also – much safer not challenging the source of one’s paycheck, especially when one’s opinions aren’t putting one’s own money at risk?

Jeff, seemingly every last one of them missed the 08 implosion and you want to give them props? I have watched many of your posts here and I have no doubt that your trusting attitude does not help you — you just don’t know it yet.

You make my point.

Micahel (Covel) -

You remind me of Fox Mulder from the X Files – a charming guy, but deeply paranoid about people in authority!

Jeff

If I might reply to “Trader Jim” who said, “economics is a rigorous empirical discipline”.

I was accepted into an Econ PhD program but I left after I saw what was really going on. For example, I saw a paper presented in which the error margin was stated as 47.22% (sic). I looked at the calculations for margin of error and saw that he had only a couple hundred data points, so I worked backward and found that to get down to a 3% error factor, he would need several thousand. The problem was that he was using national GDP numbers. Since there are only a couple hundred countries in the world (not thousands) he can never get enough data points to improve the error factor. Then throw in that he was taking all the GDP numbers at face value when in reality only the largest and most economically developed countries (about 30 of them) generate statistics comparable in accuracy to the US (yes, I said that).

To make the situation worse, he apparently didn’t understand what margin of error meant. All his results were within 47% of each other so the order of the results was entirely explainable by measurement error and thus meaningless.

Economics a a field where calculating the error factor to two deciml places passes for “economics is a rigorous empirical discipline”.

There are sheep in my film for a reason.

What’s lacking is some common sense. The politicians and economists didn’t see it coming because they weren’t 1) setting direction for the economy, 2) dealing with changes, 3) and managing.

Since they are not prepared for various possibilities, they feel behind what’s happening. That’s what usually happens when you have too high expectations.

“Reason’s last step is the recognition that there are an infinite number of things which are beyond it.” – Pascal

In general I do agree with the basic point of the Kartik essay. Although, there is a great deal of input needed from the laity but still deference to the professional economist has to carry far more weight just as it does for a physician, scientist, engineer, philosopher etc.

Where I differ from his views is that their models try to describe human behavior. They are not laws like Newton’s laws of motion or that of Einstein, (both of which are not valid in certain arenas) and hence more susceptible to failure etc.

Having said that, I want a medical diagnosis made by a proper physician in that sub-field and not by a random blogger without any credentials in the field!

Arun

16 Jeff Waters Says:
August 19th, 2010 at 3:16 am

Micahel (Covel) -

You remind me of Fox Mulder from the X Files – a charming guy, but deeply paranoid about people in authority!

Jeff
Remember Andy Grove of Intel? “Only the paranoid survive!”

Jeff says: “Isn’t it more likely that economists are employed to provide expert analysis of forthcoming economic developments, so firms can make informed decisions?”

What they do is called prediction and it doesn’t work… that’s why they spend most of their time explaining away their previous “expert analysis” and why it was wrong.

Appologies to Trader Jim.

Jeff’s comment “it [economics] does the best it can with the data that it has available” is exactly my point. I have no objection to professional scholars and others discussing ideas, but many times they don’t have data available to turn the ideas into actionable predictions, but they make predictions anyway.

In the 1980s, my employer (a big commercial bank) tried to make the econ analysis unit a profit center. They hired a publishing consultant to turn the plain reports into a glossy magazine and determine how to price the service. The consultant came back and reported that none of our customers was willing to pay for the reports. They enjoyed the sales force delivering the reports by hand over an expense account lunch, but didn’t actually do anything with the information. So the truth is: banks have economists because their customers expect it.