Past performance is not a good guide to future performance

How many times have you seen a standard disclaimer about past performance not being a good guide to the future? And internally nodded wisely, thinking that of course it’s not, the disclaimer is there to warn less sophisticated people than you. How many times have you calibrated a model based on past performance? And recent […]

All models are wrong…

… but some are more wrong than others. It’s emerged that a risk calculator for cholesterol-related heart disease risk is giving some highly dubious results. So completely healthy people could start taking unnecessary drugs. It’s not clear if the problem is in the specification or the implementation: but either way, the results seem rather dubious. […]

Implausible assumptions

Antonio Fatas has some interesting things to say about the reliance of economic models on implausible assumptions. All models rely on assumptions and economic models are known (and made fun of) for relying on very strong assumptions about rationality, perfect information,… Many of these assumptions are unrealistic but they are justified as a way to […]