Assumption: we shouldn’t expect to be able to make strong quantitative predictions unless we also expect to be able to get rich playing the markets.
That leaves qualitative predictions about things that might change. What sort of predictions of this sort were made during other crises? How did they pan out? Who has a surprisingly good track record? Can we solicit from them? What surprising actions are they taking at present? What can be inferred from that?
You can still make quantitative predictions with uncertainty. Note that beating the market isn’t impossible (someone has to make the market efficient) and even if you don’t have enough data to beat the market, that just means you make your confidence intervals larger. The point of Bayesian epistemology is that even large uncertainty can be quantified.
Assumption: we shouldn’t expect to be able to make strong quantitative predictions unless we also expect to be able to get rich playing the markets.
Not really. It’s perfectly possible to make accurate quantitative economic predictions.
1. I think we are all relatively confident that by 2021-01-01 more than 100k deaths will be attributed to COVID-19 (globally). Even though the market has certainly “priced it in”, that change in prices doesn’t change the underlying reality. There are economic realities, such as the number of people who are likely to be unemployed, which are not meaningfully influenced by changes in asset prices.
2. We know that tourism revenue will be greatly depressed over the next few months. Carnival Corporation, for example (the largest cruise ship operator), will probably make 80% less money than it would have had the pandemic not happened. I know this because the price was at $52 and now it’s at $13. Asset prices *are* strong quantitative predictions! I agree that we’re unlikely to be able to make predictions which beat those of the market. But epistemically that’s great news! You now have a mountain of asset prices to make predictions with. e.g. VIX futures are still expensive, the market is expecting the situation to evolve rapidly.
Assumption: we shouldn’t expect to be able to make strong quantitative predictions unless we also expect to be able to get rich playing the markets.
I’m confused about your distinction between quantitative and qualitative. The way I understand “quantitative”, there isn’t profit to be made off of every such prediction—for example, if copper alloys become widely used in hospitals and consumer products for its antimicrobial properties, the impact on copper prices would be tiny, and the companies making these products are privately traded.
Assumption: we shouldn’t expect to be able to make strong quantitative predictions unless we also expect to be able to get rich playing the markets.
That leaves qualitative predictions about things that might change. What sort of predictions of this sort were made during other crises? How did they pan out? Who has a surprisingly good track record? Can we solicit from them? What surprising actions are they taking at present? What can be inferred from that?
You can still make quantitative predictions with uncertainty. Note that beating the market isn’t impossible (someone has to make the market efficient) and even if you don’t have enough data to beat the market, that just means you make your confidence intervals larger. The point of Bayesian epistemology is that even large uncertainty can be quantified.
Not really. It’s perfectly possible to make accurate quantitative economic predictions.
1. I think we are all relatively confident that by 2021-01-01 more than 100k deaths will be attributed to COVID-19 (globally). Even though the market has certainly “priced it in”, that change in prices doesn’t change the underlying reality. There are economic realities, such as the number of people who are likely to be unemployed, which are not meaningfully influenced by changes in asset prices.
2. We know that tourism revenue will be greatly depressed over the next few months. Carnival Corporation, for example (the largest cruise ship operator), will probably make 80% less money than it would have had the pandemic not happened. I know this because the price was at $52 and now it’s at $13. Asset prices *are* strong quantitative predictions! I agree that we’re unlikely to be able to make predictions which beat those of the market. But epistemically that’s great news! You now have a mountain of asset prices to make predictions with. e.g. VIX futures are still expensive, the market is expecting the situation to evolve rapidly.
I’m confused about your distinction between quantitative and qualitative. The way I understand “quantitative”, there isn’t profit to be made off of every such prediction—for example, if copper alloys become widely used in hospitals and consumer products for its antimicrobial properties, the impact on copper prices would be tiny, and the companies making these products are privately traded.
That prediction is qualitative. Widely (unknown), and unknown time parameter, unknown how much tiny is, unclear which companies would win.