Many years ago I started as a macroeconomic modeller and forecaster. After a few years, I became disillusioned with the tool and methodologies followed, which were often naive and pedantic. In particular I came to the conclusion that forecasting was a ridiculous waste of time, adding nothing to human welfare. As for modelling, it can be a useful tool, but has been systematically misused with spurious results convincing gullible politicians and journalists of the merits of a policy action which had no basis in reality. In short, a model became a tool to persuade, with the assumptions being opaque, and the results tweaked to give the outcome desired.
Models, of course, have long been used. In the modern era of warfare (particularly in the 18th and 19th centuries), for example, careful models were made of the landscape to plan engagements. These were highly formalised and almost ritualistic encounters, so it is no surprise that a good general (such as Napoleon) could achieve decisive results by showing flexibility and reading the terrain.
But those physical models were well understood, including their limitations.
Unfortunately the modern computable general equilibrium model is the antithesis of transparency. I think the world would be a better place if they did not exist (despite my comment above that they can be a useful tool). While a useful tool, the tendency for models to be misused dominates the advantages they bestow.
There has been much criticism (rightly) of the use of various technical models in financial institutions which led them to take excessive risks at the ultimate cost to the taxpayer. The mathematical rigour and numerical precision of risk-management and asset-pricing tools tends to conceal the weaknesses of models and assumptions to those who have not developed them.
Researchers, too, have failed in their ethical duty to warn of the limitations of their models. Overall, the dynamic general-equilibrium models not only have weak microeconomic foundations, but their empirical performance has been remarkably poor, often worse than useless.
The models used in financial firms failed to assist management (and regulators) to assess the risks borne. The models used in governments (finance ministries and international organisations) failed to provide any useful information when it came to the tensions and imbalances in the world economy in the lead up to the financial crisis. All were in a state of shock when the crisis exploded, leading them to flap around in a panic throwing untold amounts of taxpayers’ money at a problem which they only exacerbated.
Is it such a stretch, therefore, to assert that the model caused the crisis? I think not.
While today many are looking with skeptical eyes at the macroeconomic model, the same cannot be said of climate change models which share exactly the same weaknesses as the macroeconomic model.
Climate models, too, are worse than useless, and certainly do not prove that the climate is changing.
Let’s start relying once more on empirical evidence and measurement, not complex computer models that even their creators do not understand. It is hubris to think we can model a whole economy, much less the climate.
Models can have their place: an architectural drawing, engineering specifications, etc have a long and valued part in society. But their foundations are well understood, and their results are predictable and have been validated.
Beyond this, when models become overly complicated, and their results unclear they should be rejected as a piece of propaganda.