Tuesday, July 14, 2009

Pseudoscience - Astrology vs Economics vs Financial Engineering

This article is ,by no means, a vindication of astrology.

Astrology is labelled as a pseudoscience. Agreed.
But then, economics and financial engineering are pretty much in the same boat as astrology.

If I think about the underlying science behind astrology, it could be a regression model (not necessarily linear) mimicking the effect of planetary magnetic fields on the human mind. Assuming that the magnetic field/pattern of the human brain is accurately mapped using the astrological charts. The effects of changing gravitational fields upon this static (really ?) mapping is evaluated using the original regression model. The analysis is subject to the interpretation of the astrologer and as in the case of regression models, noise could be pretty substantial. Is there a perfect science behind this ? As an Azimovian and lover of his mythology of psychohistory and foundation, I still do not believe that we can model individual human beings or humanity as a whole. It would still be interesting to analyze astrology from a mathematical perspective.

Let's talk about economics or financial engineering. Economics should never be awarded a nobel prize (as was the original intention of Alfie Nobel - Was it because of his wife running with an economist (crazy) or a well thought out decision ? One can never know except speculate.). It is pretty much pseudoscience as astrology.
Using math and statistics does not alone warrant an exalted status.

Economics (and financial engineering) try to model ever dynamic human behavior using past data. Ain't gonna work. All the failed economists who predicted eternal prosperity during the great depression of 1929 and the not so great recession of 2007-2009 are testimonial enough of this fact.....

Econ is another scam with everyone in cahoots! Just my two paise. :-)

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