Idk, but basically in economy, they try to simplify decisions, cause thay are hell of alot, and they do this with math. Althought sometimes they are so simplified that the core value of the decisions themselves get lost and so, batsh*t happens.
He was about to make a point about how economists think they can build metrics/models to measure value/risk or whatever, which is linked to financial crisis in many ways, for example to basel I act, failure to account for increased systemic risk of cdos and in general making models too complicated so their supervision gets difficult but still cant account for everything --> should use mathematically simple models with common sense.
I think he was gonna say "economists think they can build a predictive model of the economy, and when it inevitably goes wrong they don't have the resources to avoid economic collapse"
The most intelligent people really try to meet people exactly where they're at - they treat every idea like a precious jewel and they humbly try to work with it.
Yes. He was trying to see the overuse of math. He understood that economists think that they can build economics purely mathematically but it is not true. An economist knows that he must have a human element to consider whenever economics is being discussed ... ❤🎉😊
"If we took the math out, we'd have to say in simple English what was really happening. So, in 2008, they made make complicated calculations saying that banks don't have to worry about mortgages not being paid back because the odds of *everyone* being unable to pay their mortgage was next to nothing. But what happens is, of course, houses couldn't keep getting more expensive forever, and when you hit the peak, then you can only go down. And so people stop paying their mortgages, because they'd rather give up the house to the bank. The banks tried to desperately sell the houses to get the mortgage money back, but the other banks sold houses too, and nobody really wanted to buy them, so there isn't enough money to go around. And it's impossible to have an economy with too little money to go around, which creates the crisis. If we had a really simple system, where banks sort of just had to use their common sense, they might have seen how risky mortgages could be and been more careful, avoiding the crisis."
How come in horror? Many see that as a completely valid way to study economics. Behavioral economics is a whole field of that. Economy is more of a mass psychosis than collection of math equations. (Edit economy, not economics, freudian slip 😅)
No. He’s just really dumb. He is the reason that the UK government had to spend money during the covid pandemic explaining exponential growth because he could not understand it at a press briefing 😂.
It's kinda clever in a way as people can get switched off when complex issues get discussed like math and financial theory. Cutting him off draws interest in what he was saying as poeple want closure on what he was about to say so look into this idea.
I like to think that the ringtone is a back up plan. So if the interviewee is actually making sense and getting deep into stuff, then one of the producers or assistants will call her to trigger that😂
He was gonna talk about how the predictions models are very complex (mathematically and data wise) but can't really predict the future with high certainty, this in Imo is because as much data you could put into the model it would have a practical limit and all influencing factors cannot be predicted since data becomes unmanageable, unless in a rigurous closed system, so sometimes even common sense can be a better predictor. For example in high risk credit lending the prediction models basically becomes gambling while common sense suggests to stay away from it 😂
@@germanher7528 Yeah, I think he was going to say they can build a perfect system but not take into account the human factor which leads to inhuman practices.
I think what he meant was that economists can sometimes think that because they can describe what happened in the past, relatively accurately, with a mathematical formula, they then start to think that they can also predict the future just as accurately, with that formula It gives the economists a false sense of security After all, the economy is just a bunch of people doing some things, you can't super accurately predict political events with maths (or at all, really), and also can't predict economics with maths (or all that good in general, actually)
@@cheydinal5401 Absolutely! And make learning about it more accesible to the general public who don't know advanced math haha. Make the economy more for the people yk?
@@nguyenvu8262she's a *comedian* and she is in character, it doesn't matter what Diane understands as she will always act like Philomena. She made that face because she thought it would be funny and that's it
She’s right tho. Often if you do nothing in an economy, it will correct an inflationary or recessionary gap on its own. The entire economic debate lies on the quantity the government should intervene with fiscal/monitary policy to make economic recovery faster.
@@Narutouzumaki-ku2vm you see, I think that's mixed. Pre globalization that would work out pretty well, but globalization created a lot of competition for manufacturing and services to the point where if a government doesn't intervene to a substantial degree, then that country will simply fall out of favor. She's right in the sense that too often people try to roleplay as God and control the uncontrollable
I don't... IMO, adapting and recognizing authentically great moments when you see them is more important than show-horning in a few jokes for laughs. It really elevates a good show to a great one. Why have experts when they're not allowed to explain anything? This guy is so passionate about his subject, it's so sad to see him shut down like this. Entertainment doesn't have to be just jokes, it can be insightful moments, too.
It's actually a really good point, and I think the responder was going to get into the morality of economics instead of simply one based on metrics that have no relationship to what the end goal of economics should be - a better world.
As an economist, I feel like he was going towards the propensity of oversimplifying human and human behaviour into numbers which may not end up behaving like they should according to text.
brilliant comment! I was thinking the same thing. I get the gag of this show, but when there is an opportunity to learn it should be taken in full stride, it shouldn't be hushed away simply for the sake of mediocre comedy.
...economics is the study of how people use resources, not an attempt to "make a better world". So he would never say what you said because its nonsense.
@@hereandnow3156I think he obviously didn't mean that math was the problem but rather the economists who misinterpret that or that are totally detached by reality and only look at the numbers.
@@hereandnow3156 as someone who has no background related to that I claim he was about to say that economists think they can build mathematical models to predict the future but those can be very unreliable in extreme situations
Ok but I do actually wanna hear what he's got to say. It's so exciting when experts get to start questioning things and deeper conversations happen and I am starting irl for these types of conversations
Ff you want to know about the financial industry using too much math you should look up how big of a market the derivatives market is, derivatives like futures, options or swaps. That's how basically how the world economy exploded in 2008, where the derivative market of mortgage loans was bigger than the market of mortgage loans itself.
It's kind of brilliant in a way though cause cutting him off gets people invested in what he was going to say when math and finance can make people switch off lol
I think he was going to say something like, economic models are built using historical data. Where the models fail, is when there is a situation that has never happened before. That's basically what happened in the 2008 crisis
And all models are, well, models. They contain assumptions and simplifications and can only give you an answer that comes with several qualifiers attached. If interpreted by someone who understands those assumptions and simplifications, the model is useful, but if people take the model as a concrete authority and run with it problems will always arise.
I thought the same! This looks like an interview of the Tenth doctor trying to hide with humans. And the answer really looks like something he would say.
Just wanna say thank you to the economists among the commenters to explain further what he was trying to say before he was rudely interrupted! (I know it's a comedy but it got so engaging in a quick second, don't blame me!)
"Taking maths out of the equation", such a well constructed line. I think he was going to make the point that those that have really studied Economics know that mathematics is a much better tool for explaining what went wrong, than it is at predicting what to do to get things right.
