whpearson comments on Macroeconomics, The Lucas Critique, Microfoundations, and Modeling in General - Less Wrong

0 Post author: Matt_Simpson 06 June 2009 04:35AM

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Comment author: whpearson 06 June 2009 11:53:07AM *  0 points [-]

Reductionism isn't necessary for every day use. But it is preferred as it will tell you when things might change. Trends/formulae derived from simpler well tested concepts are more stable.

Take for example the long term trend of world economic growth. It is a good day to day expectation that the world economy is growing, however If we could reduce it to a function of population growth, energy supply growth and new technology we would have a better idea of when we might stop getting the fairly reliable historic growth.