How to Compete With a Computer in Economic Analysis

It is rather hard to compete with the computer when doing economic analysis. This is because computers are quite good at doing math once they are programmed, and although economics isn’t an exact science, those who study it, do the research, and use the tools certainly see it as such. Meaning they will use these equations to guestimate the future trends. How can a human being compete with a computer that analyzes data in this way when predicting economic trends and doing economic analysis? Perception can come in many forms, and it can also change like the wind. That does not always show up in the data, for instance consumers are fickle, and many of the decisions made by CEOs have to do with government intervention on trade, regulations, and taxation policies.The data does not always show when a politician is going to come up with a new law which inhibits business, or helps pick winners and losers in the market, or changes the entire dynamics of an industry which has a cascading effect on the rest of the economy. Then there are severe disruption such as natural disasters, wars, and civil unrest. And let’s not forget the increasingly pervasive black swan catastrophic economic events.

That doesn’t mean that the technical analyst studying the economy either on a macro or micro level doesn’t have the advantage, and generally they will be right most of the time, along with the AI computers they use doing the leg-work. If such a system is completely automated with artificially intelligent software, and that computer also works with probability, it may be right even more of the time. But it won’t be right all of the time.That’s where human beings might still have the advantage. Sometimes there are anomalies which are not seen readily in the data, or not recognized for some unforeseen reason. Therefore, in this year, 2012 humans are still needed for economic analysis, perhaps after years of artificial intelligence and learning machines on the job such a fact may not be true anymore, but today it is. Please consider all this and think on it.

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