Models Can't Think, But Humans Overthink
Reflections on the Election and GDPNow
I discussed the fact that models cannot think this morning in Is Nate Silver Underestimating Democrat Senate Chances in Georgia?
It occured to me that I made similar statements previously about Pat Higgins' GDPNow model.
Here is a snip of my Georgia discussion. Following that, let's look at the flip side of the coin.
Silver just flipped again on Iowa, and has been going back and forth for a week. Iowa is again in Trump's column.
I solidly disagree and may revisit Iowa soon. But now Silver has Ohio in the Biden camp.
When you change your mind every day, or even sometimes twice a day you are changing your mind on noise.
That's what we have: noise.
Models Can't Think!
In reference to the Georgia Senate election, I also said Models cannot and do not do what I just did. That is take a look at a debate in which Perdue was clearly slaughtered, then make a judgement call on it.
Nor do they properly look at momentum.
I have the same criticism of Pat Higgins' GDPNow economic model. It cannot think about "why" or make value judgements on what is happening.
When weather is a factor, GDPNow cannot make adjustments. When Covid hit, the numbers were so screwy the GDPNow model was programmed to discard the numbers as outliers that could not possibly be correct.
Models only do what they are programmed to do, typically look at data and historic trends.
There are clear errors being a slave to models, but there is a flip side.
The flip side of the coin, and it's an important one is that humans overthink.
The lead image is from Psychologists Explain How To Stop Overthinking Everything
I have a huge collection of all the amusing things, people have said would matter in this election.
People believe all kinds of things matter that won't matter and in fact cannot possibly matter.
I will post the collection after the election, and some of them will have you laughing.
Beauty of Models
The beauty of a model like Nate Silver's and Pat Higgins' GDPNow Models is they don't overthink.
Silver waits for the polls, GDPNow waits for the economic data.
I am very happy for Silver's forecasts and I find them helpful for my own thinking. The same applies to GDPNow.
It's easy to poke fun at models when they are wrong (and even when they aren't).
I think Nate Silver is brilliant. I feel the same way about Pat Higgins.
But as I explained to a couple of friends recently, I add no value if all I do is parrot the calls of others.
What's Happening and a Look Back at 2016