by Patrick Appel
Fallows sketches the limits of GDP:
In his post Heineman talks about how the "idolatry of numbers" -- worship of the spurious precision of mathematical models -- can lead to terrible real-world misjudgments. This was a powerful lesson I took from my time in graduate school studying economics: the formulas were so neat and powerful, yet their connection to the real world was so hit-and-miss. In a way this is also a theme of Liaquat Ahamed's outstanding book Lords of Finance, about the way financial "experts" helped bring on the Great Depression. They had great faith in their models; unfortunately, the models and principles didn't match reality.
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