The Limits of Empiricism, Revisited

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Market Movers

by Felix Salmon

Main

Why The Fed Should Embrace Inflation Live-Blogging Malaria

Oct 18 2007 11:18AM EDT

Deirdre McCloskey is in fine fighting form, at least by the standards of statisticians:

Good fit is not the same thing as importance. In fact, usually it has nothing to do with importance.

I think she's absolutely right. People who use a lot of statistical analysis, economists among them, tend to gravitate towards the measurable. Often, important things aren't easy to measure, and things which are easy to measure aren't important. While statistical analysis should be used to examine some a priori hypothesis, too often hypotheses are constructed around whatever data might be lying around. And if the data is crap, the results of any statistical analysis on that data will also be crap, no matter how good your fit.

(Earlier: The Limits of Empiricism)

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