Please read Nate Silver’s new book. Invite him to the white House. So much of this budget business involves
making predictions. Silver knows
predictions. I’m sure you enjoyed his
predictions last October and November (I sure did). However he does more than predict election
results. His new book (as you probably
already know) is called The Signal and the Noise: Why so Many Predictions
Fail—but Some Don’t. We often mistake
the noise for the signal he says—that is we confuse the information that can
help us make predictions—the signal—with the irrelevant information that
surrounds it—the noise that is often mistaken for the signal.
Much of his book is about distinguishing signal from
noise. It reminded me that many of our
legislators know little about economics and, it seems to me, often mistake
noise for meaningful signals. Before
they plan a budget, they need information about how to think about the results
of their actions—predicting.
On page 22 Silver gives a short list of economists who
predicted the end of the housing bubble:
Robert Shiller, Dean Baker, and Paul Krugman. I think a seminar for legislatures would be
good start to the coming budget talks, a seminar given by people who have a
record for making good economic predictions.
Let Nate Silver help.
Silver can also help policy makers identify the phenomena
that can be predicted.
No comments:
Post a Comment