Home > Mainstream failure > AMP’s Shane Oliver wins this week’s ridiculous precision award

AMP’s Shane Oliver wins this week’s ridiculous precision award

Having just railed against misleading and inherently ridiculous “precision” in economics on several previous occasions already, we get this from Dr Shane Oliver, head of investment strategy at AMP, in today’s AFR: 

He predicts a “55%” probability of the RBA raising interest rates at the next meeting.

55%.  Not 50%.  Not 60%.  Not 65%.  But 55%.  How could you possibly make this kind of precisely quantified prediction for a one-off event?

Basically he’s saying he doesn’t have a clue what they’re going to do, but thinks it’s slightly more likely they’ll raise them.

Why doesn’t he just say that?

Is everyone with a PhD in mainstream economics so defensive about their useless qualifications that they need to hide behind false “precision” in estimating future events?

If so, I think there’s a 94.59% probability of sovereign debt default in at least one of the top 50 economies in the next 4 years.   And if I’m wrong, I’ll blame an unanticipated “Black Swan” event for the 5.41% event occurring, not my model.  I will (of course) be right, it’s just that a highly unlikely event will have occurred – which I already incorporated into my estimate by providing a probability of less than 100%.

So I can never be wrong.  My model will always be right.  It will be reality that will be wrong, if my prediction does not come true.

That’s mainstream economics for you!

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Categories: Mainstream failure
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