This kind of armchair criticism is not particularly enlightening, or productive. You can still make useful and largely correct predictions without understanding all of the dynamics in a system.
After all, all science amounts to an approximate model, even your vaunted "hard sciences".
To put it bluntly, the universe is not sneaking around behind your back and trying to exploit any hole in your models it can find. Businesses and the financial marketplace do exactly that with economic models.
Not this. Unless we have explicitly and fairly advanced education, and are disciplined enough to apply it to all we do, we - the human species, every single one of us - suck at statistics, are terrible at understanding or predicting the behaviour of complex systems.
Read Kahneman's "Thinking,Fast and Slow" to get a better idea as to why.
Our biological heritage has left us - oh, OK, the vast majority of us - fundamentally incapable of understanding complex systems and making predictions that have any value beyond the immediate short term. Our intuition - our System 1 heuristics (read the book) - is completely ill-suited to this, and our reason - System 2 (ditto) - doesn't fare much better without advanced training.
Kahneman and others also cite many cases where trained experts make the same errors of judgement and analysis as the rest of us when they stray even fractionally from their areas of expertise.
The GP is right: We get a lot more of this "soft stuff" wrong than we get right because we generally don't bother to apply hard science methods to the problem.
Personal anecdote: I stopped listening to the news because I used to work in crypto. Well, that's the tl;dr reason.
I worked for a company that did PKI and noticed that tech journalists, who might be expected to at least have some greater technical background than just folk made egregious errors in their reporting, in reports that were researched and drafted and edited and considered and fact-checked prior to publication.
While PKI is complicated, it is not complex. Not like the economy. So if these "specialized" journalists with a technical leg up could get so much of something so simple so wrong, what were folks with degrees in English and/or journalism doing to something as advanced and out of our grasps as the economy?
Truth be told, I haven't stopped reading the news - I read it differently. Should an interesting headline catch my eye, I look for a few more. The more interesting the story, the more sources I check/read before accepting to learn anything from the reporting. This is a necessary side effect of how complex the world and its news are, and how simplistic reporting is.
Economists had no idea why their theories of rational actors were so flawed (but flawed they knew them to be) until Kahneman and Tversky came along. Hard science can only cast light on the dismal and dark, and the dismal and dark will remain so, will remain largely speculative, until they adopt our tools.
I do the same. I try to make sure new interesting models of the world are kept at arms length until I've at least tried to fully understand it myself. I'm still free to use them as black boxes but I always remind myself that they are subject to catastrophic failure at any point in time.
I'm sorry but were you alive during the last couple hundred financial crises?
I mean if your entire field is dedicated to predicting the future of finance and economics and you don't predict them - it kind of shows that you really don't know what you are doing.
All I'm doing is pointing out that the social sciences have no clothes on.
"I mean if your entire field is dedicated to predicting the
future of finance and economics and you don't predict them
- it kind of shows that you really don't know what you are
doing."
I thought the field of finance and economics was about how, unless you have something other people don't, market prices cannot be predicted?
right....because the field of math has never changed course (see: Godel), nor physics (see: Newton, Einstein, )...
You're reading too much into the disproportionate effect mistakes in economics have had on society. Science get things wrong all the time...failure is part of the learning process.
I don't understand how the field of math can change course. I mean Hilbert, Frege, Church had an idea that turned out to be infeasible. But the field in general continued and has not been affected much by that goal nor the consequences of Godel's theorems. In mathematics there is no where in particular we want to go to. This notion of course changing is thus something I am having trouble placing.
As for physics. The idea of not changing course is exactly what sets apart good theories from bad. If you have a new theory and it does not include the old at a limit then it is a good sign that you are doing something wrong. Newton was not wrong, just inaccurate. Einstein did not invalidate Newton, only corrected the extreme cases.
True but at least the hard sciences modify after being falsified.
The social sciences don't have to because they aren't based on the scientific method - mainly the design and independence of repeatable experiments with controlled variables.
Hard science equations have no room for bullshit whereas the social ones do - hence EMH is still taught.
The social sciences don't have to because they aren't based on the scientific method - mainly the design and independence of repeatable experiments with controlled variables.
The same is true of many physical sciences - geophysics, oceanography, climate science, astronomy, etc. Your criticism applies to basically any scientific theory which has poorly understood microfoundations (i.e., a lot of them).
The EMH is taught because it's a useful approximation to reality, even if it's imperfect. Or, as the article puts it: Whether markets are efficient or not, and whether P = NP or not, there is no doubt that there will be markets that can allocate resources very close to efficiently and there will be algorithms that can solve problems very close to efficiently.
Incidentally, the EMH claims that financial crises are unpredictable. So the lack of useful predictions of the financial crisis is evidence in favor of the EMH.
[edit: Note, in response to Dn_Ab that 3SAT, the problem considered by the paper, is NP complete.]
But he is not, in that quoted statement saying much. For example, if the problem is NP-Hard but not NP-Complete then we will not even be able to tell how well we are doing.
Or for markets, aspects of it may invovle solving NP-Hard problems with efficient approximations that are themselves NP-Hard (you are better placed to opine on whether such a possibility is likely).
I don't know. We've seen the idea of rational agents in economics go away, right?
Also...I'm not an economist so I don't really know what's going on in this area...but maybe EMH is still being taught because it's the best model we have at the moment?
Are you sure it's being taught everywhere? Maybe some places have already dropped it? Change takes time.
After all, all science amounts to an approximate model, even your vaunted "hard sciences".