Keynes on the limits​ of econometric methods

14 Jan, 2019 at 20:20 | Posted in Statistics & Econometrics | 5 Comments

4388529Am I right in thinking that the method of multiple correlation analysis essentially depends on the economist having furnished, not merely a list of the significant causes, which is correct so far as it goes, but a complete list? For example, suppose three factors are taken into account, it is not enough that these should be in fact vera causa; there must be no other significant factor. If there is a further factor, not taken account of, then the method is not able to discover the relative quantitative importance of the first three. If so, this means that the method is only applicable where the economist is able to provide beforehand a correct and indubitably complete analysis of the significant factors. The method is one neither of discovery nor of criticism. It is a means of giving quantitative precision to what, in qualitative terms, we know already as the result of a complete theoretical analysis.

John Maynard Keynes

5 Comments

  1. Hittade din sida idag och har läst och sett lärorika videor och fått både musiktips och filmtips. Tack. Det var så oväntat bara att det skulle finnas såpass mycket musik. Jag är själv akademiker och älskar musik men i min hjärna så är “andra” akademiker bara akademiker utan musiksmak. hahaha. Så jag fick även chansen att rannsaka mig själv och mina världsföreställningar och mitt automatiskt tänkande (fördomar) mot andra akademiker med texter på sin hemsida. Jag har tänkt och tänk och landar i professor Baltazar eller Doktor Snuggles. hahaha. Jag måste på något sätt blivit påverkad som barn och fått denna bilden och det är svårt att se någon av dem pausa sina experiment för att gå och sätta på en bra skiva med god musik. hahaha. Jag skyller på statstv.

    Tack för en väldigt informativ sida. Kommer återvända!

    //Linda

    Comment by Linda Brandin— 15 Jan, 2019 #

  2. This is basically what Nancy Cartwright, in How the Laws of Physics Lie, said about all scientific controlled experiments to test causation. It is a catch 22 I talked about in my PhD. We need to know what all the causes are before we can test for which causes are operating.

    Comment by Karey— 15 Jan, 2019 #

    • Funny you should mention NC, since she has influenced my own thoughts on science for three decades now 🙂

      Comment by Lars Syll— 15 Jan, 2019 #

  3. This is priceless!

    [Multiple linear regression analysis] is a means of giving quantitative precision to what, in qualitative terms, we know already as the result of a complete theoretical analysis.

    Comment by Bruce Wilder— 14 Jan, 2019 #

    • Priceless yes, but also still something you find in many econometrics textbooks!

      Comment by Lars Syll— 15 Jan, 2019 #


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