Link to Interview

As I was watching David Laibson's interview regarding behavioral economics, I was most intrigued by his stance on whether or not we'll be able to prevent long-term economic events at some point in the future. Indeed, his stance essentially argues that even if we employ the tools of behavioral economics and machine learning, we will most likely never be able to predict long-term economic events. I find this argument interesting because it implies that even with the most sophisticated models and technological tools, we lack the ability to predict outcomes for the economy. If we take the stock market as an example, we lack the ability to accurately predict its future because our own psychological limits and biases are already priced in, and thus, even if we incorporated a behavioral layer into these models, we would not be able to circumvent our own limitations that are already priced in. Given that the economy plays such an important role in society, this stance highlights the pessimistic limitations we harbor in predicting our futures.