Peter Orszag and Economic Models

A while ago I heard this interview with Peter Orszag, Director of the US Office of Management and Budget and one of President Obama’s key economic advisors. Interestingly to me, given what I’ve written previously about quantitative models of human social and economic activity, Orszag is interested in Behavioural Economics and is somewhat skeptical about the power of mathematical models:

“Too many academic fields have tried to apply pure mathematical models to activities that involve human beings. And whenever that happens — whether it’s in economics or health care or medical science — whenever human beings are involved, an approach that is attracted by that purity will lead you astray”

That’s not to say he’s not going to use some form of model forecasting to do his job. When Jon Stewart highlights (in his own amusingly honest way) the wide range of economic model projections out there for the US deficit, Orszag points out that he needs at least some semblance of a platform from which to anchor his management of the US economy. But it’s reassuring for me to know that in managing the future this guy won’t be seduced by quantitative predictions of it.

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