MathJax

MathJax

Wednesday, April 24, 2013

Putting Blackbox Models in Charge

Something I read in the Economist this week struck me, (April 20, 2013 edition - pg. 30 "That swooning feeling").  This seems worth quoting completely.  It is speaking about various theories about the repeated apparent dip in the economy each spring.  "One theory is that models interpreted the economy's plunge in late and 2008 and early 2009 as partly seasonal, and responded by nudging up subsequent winter figures and nudging down summer data to compensate."  Really!  Are the models that the Bureau of Labor Statistics this autonomous and opaque that no one who is in charge of using them can even figure out whether such a thing is occurring?  Their testing solution for this evidently works like this - "But the federal Bureau of Labor Statistics has found that the pattern persists even if the job numbers are seasonally adjusted without those recession months."  Could they really have so little comprehension of the model they are using, that they can't figure out whether such an effect is likely, and the only way of testing is to remove the data and run it again?  The stock market swings up and down, hiring and lay-off decisions are made, investments made or abandon on this number, and evidently no one has any idea how it actually comes into existence.  It would be better to publish the raw employment surveys and let people construct their own analysis than to use a black box of this sort.

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