Our Ugly Economic Models

Posted by: on Aug 25, 2014 | No Comments

Good luck modelling the irrational mind

Accurate economic forecasting is as rare as a beautiful dalliance in a Swansea nightclub.  Economics deals with the aggregation of actions, reactions and decisions of real human lives.  For economists to assume all actors are making rational decisions, not based on emotions, is an oversimplification of reality.  How many of your purchases are based on outcomes further down the road?  Just ask anyone who has chained their heart to a little white dove or felt envy over a neighbours new car.  The psychological aspect of human decision making is much maligned within the heart of economics.

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