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Calculators and Quacks: Feeling the Economy’s Pulse in Times of Crisis

Including a Symposium on Mary Morgan: Curiosity, Imagination, and Surprise

ISBN: 978-1-78756-424-4, eISBN: 978-1-78756-423-7

ISSN: 0743-4154

Publication date: 24 October 2018

Abstract

In this chapter, I take a talk show in which Coen Teulings, then Director of the official Dutch Bureau for Economic Forecasting and Policy Analysis (CPB) was interviewed about its economic forecasts in the immediate aftermath of the financial crisis of 2008 as point of entry into an examination into how personal experience and judgment enter, and are essential for, the production and presentation of economic forecasts. During the interview it transpired that CPB did not rely on its macroeconomic models, but on personal experience encapsulated in “hand-made” monitors, to observe the unfolding crisis; monitors that were, in Teulings’ words, used to “feel the pulse” of the Dutch economy. I will take this metaphor as a cue to present several historical episodes in which models, numbers, and a certain feel for economic phenomena aimed to make CPB economists’ research more precise. These episodes are linked with a story about vain attempts by CPB director Teulings to drive out the personal from economic forecasting. The crisis forced him to recognize that personal experience was more important in increasing the precision of economic forecasts than theoretical deepening. The crisis thus both challenged the belief in the supremacy of theory driven, computer-based forecasting, and helped foster the view that precision is inevitably linked to judgment, experience and observation, and not seated in increased attention to high theory; scientifically sound knowledge proved less useful than the technically unqualified experiential knowledge of quacks.

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Acknowledgements

Acknowledgments

A longer version of this chapter was presented at the HISRECO conference 2017 in Luzern. I would like to thank participants of that conference for their comments and Pim Klaassen and Guus Dix for comments on an earlier Dutch version that was published in Dutch in Krisis (Maas, 2010). I would like to thank Casper van Ewijk, Henk Kranendonk, Wim Suyker, Johan Verbruggen, and Gerard van Welzenis, then all working at CPB, for their willingness to share their knowledge. Special thanks go to Tiago Mata with whom I interviewed Suyker and Welzenis in early February. Shortly after, I discussed this case with Mary Morgan and Charles Baden-Fuller over a very nice dinner in Amsterdam and they urged me to write it down. It took a while, but here it is.

Citation

Maas, H. (2018), "Calculators and Quacks: Feeling the Economy’s Pulse in Times of Crisis", Including a Symposium on Mary Morgan: Curiosity, Imagination, and Surprise (Research in the History of Economic Thought and Methodology, Vol. 36B), Emerald Publishing Limited, Bingley, pp. 23-39. https://doi.org/10.1108/S0743-41542018000036B003

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Emerald Publishing Limited

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