Jessica Weinkle

science, risk, politics... and society

Congress ponders a science policy for economic models

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With summer break just around the bend, I've started cleaning up my desktops, those virtual and physical.  Cleaning up however, usually means wading through and reviewing my miscellaneous downloads collected with a passing, "oh, that's kinda interesting" as I was searching the web for something else.  

The excerpts here are from the House Committee on Science and Technology in 2010, "Building a science of economic for the real world."  The hearing was an effort to better understand economic models, their uses, and attribution tot he economic crisis that gripped the world at the time. Brad Miller (D-NC) chaired the committee and provided the opening remarks.  Several hot shot economics scholars were witnesses.

Miller prefaced the meeting with some astute questions, not only about the wisdom of how the models are used in everyday decision making but about developing practical science policy

To be fair, DGSE [Dynamic Stochastic General Equilibrium model] and similar macroeconomic models were first conceived as theorists’ tools. But why, then, are they being relied on as the platform upon which so much practical policy advice is formulated? And what has caused them to become, and to stay, so firmly entrenched? And, finally, the most important question of all: What do we get when we apply the various tools at our disposal to the urgent economic problems we’re facing today? 
If this approach to economics is useless for the purposes of advising policy makers to lead to better economic outcomes, what are we getting out of the economic research funded through the NSF?
Besides raising these questions about the dominant model, we plan to have a look at the competition. What kinds of alternative models exist, and do we need to generate still others? Should we be using a variety of models in concert rather than relying on only one type? Should the Federal Government use its funding of economic science to encourage the development of these alternative approaches?

The opening remarks by Paul Broun (R-GA) targeted the difficult challenges facing decision makers even when modeled information is present. 

Ultimately, decisions have to be made based on a number of variables which should include scientific models but certainly not exclusively. As the witnesses of previous hearings have stated, ‘‘Science describes; it does not prescribe.’’ No model will ever relieve a banker, trader, risk manager or policymaker of the responsibility of making difficult decisions.

I'm sure there's more good stuff in there but it's time to move on to the next document...