{"id":20,"date":"2025-04-30T13:22:35","date_gmt":"2025-04-30T17:22:35","guid":{"rendered":"https:\/\/people.bsu.edu\/econbriefs\/?p=20"},"modified":"2025-05-23T09:49:24","modified_gmt":"2025-05-23T13:49:24","slug":"exact-economic-estimates-merit-your-skepticism-by-dr-cecil-bohanon-and-dr-john-horowitz","status":"publish","type":"post","link":"https:\/\/people.bsu.edu\/econbriefs\/2025\/04\/30\/exact-economic-estimates-merit-your-skepticism-by-dr-cecil-bohanon-and-dr-john-horowitz\/","title":{"rendered":"Exact economic estimates merit your skepticism \u2013 by Dr. Cecil Bohanon and Dr. John Horowitz"},"content":{"rendered":"

Originally written on 11\/7\/2022<\/em><\/p>\n

In his <\/span>new book<\/span><\/a>, Economist Russ Roberts writes about tame and wild problems. Tame problems are well-defined and predictable, and wild problems are loosely defined and unpredictable. The moon landing was a tame problem. Though it was difficult, it was a defined and predictable use of science, engineering, and rational thought. Wild problems are problems where knowing which path to take and the consequences of choosing the various options are hidden, making rational decision-making difficult. Russ writes that choosing what job to take, whom to marry, and whether to have children are wild problems.\u00a0<\/span>\u00a0<\/span><\/p>\n

Federal Reserve monetary policy is also a series of wild problems. Princeton\u2019s economist Alan Blinder\u2019s <\/span>new book<\/span><\/a> chronicles the fiscal and monetary policy of the last 60 years. Reviews of the book re-enforce that its main point is how little economists know about the dynamics of macroeconomic adjustment. Friendly Berkley economist <\/span>Brad DeLong<\/span><\/a> summarizes the book: \u201cThe big lesson of the past 60 years\u2026. is that there is no big lesson\u201d and \u201cthat economic policymakers have been playing a never-ending game of Whac-A-Mole.\u201d Blinder critic and George Mason University economist <\/span>Arnold Kling<\/span><\/a> argues that the book understates the actual degree of macroeconomic uncertainty, especially since Blinder \u201ccontinues to treat macro econometrics as a scientific tool.\u201d Kling points out, \u201cmacroeconomic data is not stationary.\u201d University of Chicago economist <\/span>John Cochrane<\/span><\/a> argues that in the final analysis, economic policies are usually made by \u201cCheshire Cat back-of-the-envelope calculations.\u201d\u00a0<\/span>\u00a0<\/span><\/p>\n

Federal Reserve Chairs from <\/span>Ben Bernanke<\/span><\/a> to <\/span>Janet Yellin<\/span><\/a> to <\/span>Jerome Powell<\/span><\/a> assure us they and their staff will adjust their policies \u201cat the appropriate time\u201d when it is \u201clikely to become appropriate\u201d or \u201cwhen it will become appropriate.\u201d They rarely offer much clarity regarding exact timing because they do not know the answers to essential questions, such as: How long will it take for Fed policy to bring us back to the pre-COVID target of 2% inflation? We do not even know if the Fed will sustain its commitment to a 2% inflation rate.<\/span>\u00a0<\/span><\/p>\n

Economists have solid theoretical and empirical reasons to expect certain policies to generate certain results. However, economics and all social science are not Newtonian physics and never will be. Economists of all stripes have known this for some time. Social scientists\u2019 enthusiasm to make a better world has often led to this self-deception and proclamations suggesting otherwise. Be skeptical of exact economic estimates: especially your own.\u00a0<\/span>\u00a0<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"

Originally written on 11\/7\/2022 In his new book, Economist Russ Roberts writes about tame and wild problems. Tame problems are well-defined and predictable, and wild problems are loosely defined and unpredictable. The moon landing was a tame problem. Though it was difficult, it was a defined and predictable use of science, engineering, and rational thought. […]<\/p>\n","protected":false},"author":112,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[85],"tags":[115,118,117,105,98,4,7,119,116,114,111,112,113],"class_list":["post-20","post","type-post","status-publish","format-standard","hentry","category-macroeconomics","tag-alan-blinder","tag-arnold-kling","tag-brad-delong","tag-covid","tag-fed","tag-federal-reserve","tag-inflation","tag-john-cochrane","tag-macroeconomic-adjustment","tag-monetary-policy","tag-russ-roberts","tag-tame-problems","tag-wild-problems"],"yoast_head":"\nExact economic estimates merit your skepticism \u2013 by Dr. Cecil Bohanon and Dr. John Horowitz - Econ Briefs<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/people.bsu.edu\/econbriefs\/2025\/04\/30\/exact-economic-estimates-merit-your-skepticism-by-dr-cecil-bohanon-and-dr-john-horowitz\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Exact economic estimates merit your skepticism \u2013 by Dr. Cecil Bohanon and Dr. John Horowitz - Econ Briefs\" \/>\n<meta property=\"og:description\" content=\"Originally written on 11\/7\/2022 In his new book, Economist Russ Roberts writes about tame and wild problems. 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