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What Scientific Method?

Posted By Guinevere Nell On February 11, 2010 @ 4:00 pm In Economics | Comments Disabled

President Obama's Economic team [1]

The White House Council of Economic Advisers (CEA) has released a projection of jobs created [2] by the economic stimulus bill. However, the method they used to get these numbers falls short of basic scientific standards [3]. The CEA modeled a potential outcome for the economy without the stimulus, basing it on historical data. They then compared this computer simulation with the actual data about what occurred with the stimulus – and have declared that the stimulus worked.

This method would be met with a failing grade in any decent university economics course. A projection of a potential economic outcome based on a model must be compared with a baseline scenario produced by that same model. This is basic: the policy simulation must be compared with a baseline. Instead, the White House compared a simulation with empirical data!

This is absurd because any slightly different assumption in a simulation will produce a different result. When comparing with a baseline these can be controlled—we can see what assumptions went into the baseline scenario and which went into the simulation of the policy. There are no hidden tricks. But if a simulation is compared to empirical data, we have no way to know why the two differ. It could be anything.

What were the assumptions in this simulation, I wonder? Do they not know that they must use a baseline—or was this a purposeful political maneuver?


Article printed from The Foundry: Conservative Policy News from The Heritage Foundation: http://blog.heritage.org

URL to article: http://blog.heritage.org/2010/02/11/basic-scientific-methods-be-damned/

URLs in this post:

[1] Image: http://www.foundry.org/wp-content/uploads/100211-obama-economic-team.jpg

[2] a projection of jobs created: http://www.whitehouse.gov/administration/eop/cea/economic-report-of-the-President

[3] falls short of basic scientific standards: http://www.heritage.org/Research/Economy/wm2799.cfm

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