Economics and Emotions

Economic forecasts depend on a chosen selection of past data and future assumptions; these choices are likely to be strongly influenced by the desired outcome.

The Remain case is mostly economic, based on the fear of negative impacts if we Leave. The forecasts on which the fears are based rely on negative assumptions and so have self-fulfilling outcomes. They also assess the relative outcome against a Remain scenario in which everything continues serenely onwards. That is very unlikely.

The profound problems of the Eurozone are obvious now so there must be change, whether deliberate or circumstantial. Such change is not included in models, perhaps because the changes aren’t yet known, that is, they are uncertain (we remain in the dark). But neither are the changes resulting from Leave, though that hasn’t stopped some “experts” from assuming specific outcomes to create their biased reports. Yet we know the EU’s plans (see Five Presidents Report) and we can see the circumstantial pressures, not least in Greece and Italy

There is something profoundly unsatisfactory in basing the arguments on economic forecasts that are derived from unspecified assumptions selected to give the desired outcome, whether for or against Brexit. If, as seems likely, the economic arguments are the ones that most people will base their vote on, then the outcome will depend on which case makes the best of its selected assumptions or is able to contradict the other side’s case most effectively, using assumptions again.

Of course, most of us will base our vote on impressions and feelings – emotional judgements – rather than analysis. This would probably be better than a false analysis based on unwarranted assumptions, except that our impressions and feelings may well be swayed by the pseudo-rationality of the experts. If this is correct then Britain’s economic and political future will be based on a mix of emotion and unreason. Not a cheerful prospect.


Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.