Comments on: Forecasting and Tomorrow’s Jobs Report

By: Misaki

Misaki — Sun, 08 Jul 2012 21:46:47 +0000

>marginal product theory

Remember this chart? http://s122.photobucket.com/albums/o245/Taemojitsu/?action=view&current=theiPodeffect.jpg

A marginal product which is not sold leads to no increase in revenues. A marginal product which can be sold only be decreasing revenue for other products, through lower prices, can actually lead to a decrease in revenues meaning it would have negative marginal revenue.

By: Marc

Marc — Thu, 05 Jul 2012 21:25:40 +0000

One should not put econometrics on trial, especially considering that there are essentially two distinct “fields” in econometrics, i.e., microeconometrics and macroeconometrics (more commonly known as time series analysis).

As regards the latter, Mark Thoma is right that forecasting is only a small part of it.

As regards the former, most of the time we couldn’t care less about forecasting, since we are for the most part interested in disentangling causal relationships from correlations, a task that could not be further removed from forecasting.

By: Jared Bernstein

Jared Bernstein — Thu, 05 Jul 2012 21:23:37 +0000

Makes sense, and you would know, being a tony academic yourself. I do, however, recall a lot of forecasting back in econometrics in grad school, but that was an earlier era…in fact, I remember a really fat book called “Forecasting” by an author with a Greek name–but I may be dreaming all of this up. That where we learned ARIMA, seasonal adjustments, smoothing, and so many other fun things…ahh, to be young again.

By: Jared Bernstein

Jared Bernstein — Thu, 05 Jul 2012 21:04:19 +0000

That’s right! If you’re still at work, go home early–tell your boss I said it was OK.

By: A Cassel

A Cassel — Thu, 05 Jul 2012 20:59:32 +0000

Not sure how Tom Lehrer fits your context, but the quote is from “The Folk Song Army”. And boy, are you dating yourself –the album ‘That Was the Year That Was’ was new in 1964, if I recall rightly:

There are innocuous folksongs, yeah,
but we regard’em with scorn.
The folks who sing’em have no social conscience. Why
they don’t even care if Jimmy cracked corn…

By: Mark Thoma

Mark Thoma — Thu, 05 Jul 2012 20:30:33 +0000

I think it’s important to remember that most econometricians are involved with testing theories — finding out how the world works — rather than forecasting. Most econometric courses don’t teach much about forecasting, it is all about hypothesis testing (e.g. in forecasting, it is often worth it to trade tiny bias for greater precisions, but in hypothesis testing that is avoided, particularly for point estimates).

An econometric model can, for example, determine whether a particular correlation/prediction is in past data, but still be lousy at predicting out of sample.