It was once hoped that really understanding the structure of the economy would also help in the sort of unconditional forecasting that Gardner and Tetlock are more interested in. Alas, that turned out not to be true. Big “structural” macroeconomic models predict no better than simple correlations. Even if you understand many structural linkages from policy to events, there are so many other unpredictable shocks that imposing “structure” just doesn’t help with unconditional forecasting.
But economics can be pretty good at such structural forecasting. We really do know what happens if you put in minimum wages, taxes, tariffs, and so on. We have a lot of experience with regulatory capture. At least we know the signs and general effects. Assigning numbers is a lot harder. But those are useful predictions, even if they typically dash youthful liberal hopes and dreams.
Doing good forecasting of this sort, however, rewards some very hedgehoggy traits.
Focusing on “one analytical tool”—basic supply and demand, a nose for free markets, unintended consequences, and regulatory capture—is essential. People who use a wide range of analytical tools, mixing economics, political, sociological, psychological, Marxist-radical and other perspectives end up hopelessly muddled.
Keeping analysis “simple and elegant” and “minimizing distractions” is vital too, rather than being “comfortable with complexity and uncertainty,” or even being “much less sure of oneself.” Especially around policy debates, one is quickly drowned in mind-blowing detail. Keeping the simple picture and a few basic principles in mind is the only hope.
Indeed, the rent-controlled municipalities tend to be ones favored by geography, and thus attract smart, well-heeled people, who figure out ways to make it work.
To make an all-else-being-equal forecast about the impact of imposing a policy of rent control on Santa Monica, you only need to know that it would cause less investment in apartment buildings than would happen otherwise.
On the other hand, to make an unconditional forecast about what Santa Monica would wind up like, you'd need to understand a lot more factors, especially about human capital, which economists are not very bright about.