No quantitative economic models are just as useless [as climate models].
Uh oh, take a look at this one:
The Cost of Climate Regulation for American Households (PDF) (The Marshall Institute)
Here's the gist of the "Executive Summary" page:
In this paper we summarize various estimates of the costs of mitigation of adverse impact of the climate change via cap-and-trade...
However, our main finding is that even for more optimistic estimates, the mitigation costs are likely to amount to as much as 1% drop in consumption starting today and going into the future, which, as we argue, constitutes an enormous impact on social welfare.
And how did they find these findings? Where did these "various estimates" come from? Let's check out "Table 1: Percent Change in GDP from Baseline" on page 4. Sure enough, seven different findings by seven different groups are tabulated. But what's this in Column 2? "Model."
Listed in this column are: EPPA, NEMS, MRN-NEEM, GI, ADAGE, and IGEM. (Some groups used more than one, and some models were used by more than one group).
Perhaps these are the names of fashion models who just happen to have a keen intuition for economic forecasting? Or model railroads that the economists play with as they derive their forecasts through sheer brainpower?
Oops, no such luck. Here's some info on EPPA, from MIT no less. (They don't use computers much there, do they?)
"The model is formulated in two versions with contrasting representations of agent expectations. The recursive-dynamic (myopic) version is the more computationally efficient..."
Maybe they need it to be computationally efficient because they run it on their slide rules. Or maybe... it's just virtual reality!
And here's someone using NEMS. Uh oh:
"We run NEMS on the same computer platform that EIA uses (RS/6000, under AIX)"
More virtual reality!
"MRN is a computable general equilibrium model of the US economy that simulates patterns of investment and consumption behavior... MRN and NEEM are integrated using an iterative solution procedure."
Iterative, I've seen that word before, isn't that how climate models work too? More virtual reality!
Need I go on?
Never mind, I will anyhow.
"ADAGE is a dynamic computable general equilibrium (CGE) model capable of investigating economic policies at the international, national, U.S. regional, and U.S. state levels. CGE models such as ADAGE combine economic theory and empirical data to estimate policy effects, while accounting for all interactions among businesses and consumers."
Virtually, of course.
"The Global Insight (GI) long-term U.S. macro economic model is a large-scale 30-year (120-quarter) macroeconometric model of the U.S. economy. It is used primarily for commercial forecasting.
"Over the years, analysts at The Heritage Founda tion's Center for Data Analysis have worked with economists at Global Insight to adapt the GI model to policy analysis. In simulations, CDA analysts use the GI model to evaluate the effects of policy changes..."
Simulations? Not laboratory tests? More virtual reality!
And how about IGEM? Well, if MIT has one, Harvard has to have one of its own, right? Oh dear, look at all those simultaneous interconnected equations! Do you think they run it on a computer, or use a Magic 8-ball? Either way, it's virtual reality!
Poptech, will you now be rejecting the findings of this report too? It's just all just virtual reality, which you don't believe in, right?
Respectfully,
Myriad
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