FREAK-TV: Was Alan Greenspan Just Lucky?

Video

For the past couple of months, we’ve been regularly posting short FREAK-TV videos, made by resident young genius Nick Graham, in a box on the right-hand column of our home page. The problem was that the video itself couldn’t be housed within a blog post, so you had to scramble over to the right-hand column to watch the video and then scramble back here to the blog to comment or read further.

That problem is a thing of the past. Now, thanks to superior minds at NYTimes.com and Feedroom, videos can reside right here in a blog post.

Our latest video has Levitt talking about how hard it is for economists to make macroeconomic predictions. I hope everyone in the world watches this video, if only because I, even as a non-economist, am asked about five times a day about the future of interest rates, the stock market, or the price of pork bellies.

In the video, Levitt goes so far as to wonder if Alan Greenspan, everyone’s favorite economic guru, was in fact more lucky than great. FWIW, it looks like an earlier prediction that Levitt made about Greenspan may indeed come true. In a blog post last month about the release of Greenspan’s book, Levitt noted that the publisher announced a print run of 1 million copies. “I predict that 30 percent of that initial printing of books will never be sold,” he wrote.

What do the numbers say? According to sales data from Bookscan, which is thought to represent 70 to 80 percent of U.S. sales, Greenspan’s The Age of Turbulence has sold about 285,000 copies since its release, but sold only 23,000 last week. Which means that it came out of the gate huge, as would be expected for a book of this sort with massive media exposure, but it will have to hang around for a few months at the current rate of sale to hit even 700,000 copies.

Finally: you can now access all our earlier videos, within the blog, by clicking on the FREAK-TV tag.


mgroves

I continue to enjoy being confused by the random stock footage in these videos.

zoe

I wouldn't call Greenspan lucky so much as incredibly cautious.

As for his book... throwing a few adjectives in there wouldn't have hurt matters any. It was about the most dispassionate memoir I've ever read.

omodudu

This videos can not be embedded, too bad I can not share this wth my readers.

Freddie

I don't think I would call Alan Greenspan lucky, since that implies there was no real effort involve in his predictions. I would say he had a job to do and he did it well. Is it repeatable for the next guy? Maybe. Maybe not... but then time does not roll backwards so what was predictable in the Greenspan years won't look the same for the next guy.

Arcticgoldfinger

During Greenspan's tenure at the Fed the United States ran up the largest national debt the world has ever seen. The consequences of that are going to be horrendous. Now if I went out and borrowed ten million dollars and lived the high life it would certainly look like things were booming for me. Until I had to pay the money back, of course. That is what it was like during Greenspan's tenure and it made him look like an economic genius. To his credit, Greenspan pointed out the problems that would ensue, but was ignored by Congress and the White House. So, if looking good for all the wrong reasons is "lucky," then I guess he was lucky. My advice to the world right now: buy gold.

Jasbinder

When Levitt was in London a couple of months back during his double-header with Gladwell, he hadn't at that point read Fooled by Randomness - it apparently is on his office floor somewhere. If that's still the case, then trust me, Levitt and FBR's author Nassim Taleb should get on well following the admission in the clip that economists (a group Nassim hates alongside journos) are only good at retro-fitting explanations. Maybe an appropriate collective noun is required for these hindsight-biased macro economists.

Andy

Umm actually it looks like the prediction will come true. It didn't say that 70 percent would be bought.

Ted

I like when Steven Levitt talks. Keep doing that please.

Jed Christiansen

Most "experts" are poor predictors. That is why the Wisdom of Crowds phenomenon can be so valuable.

Prediction markets and similar tools are used to aggregate all of the various individuals information. While their output still might not be a perfect forecast, it WILL be better than nearly any expert alone.

YiYang

Considering that economic data is and never has been here and present, Greenspan has to have been pretty lucky. With all the data available nowadays, things have become easier, but imagine trying to aggregate figures back in the day before computers and the internet.

Bill

Alan Greenspan was much more than lucky. He recognized that in a dynamic and fluid environment, one couldn't necessarily rely on a single or even consistent set of source data to guide evaluation and decision-making. He was excellent at looking at a variety of data and altering the weight/credibility of information on the fly. He will be a hard act to follow at the Fed.

redx

Good luck in retirement Alan...don't worry it wasn't your fault...you totally came out against those tax cuts. The tech and real estate bubbles ans 9 trillion debt could have happened to the best of us.

Bruce Freedman

I spent over 10 years as an investment analyst/fund manager. It's obvious to me that the bulk of analysts, economists and other investment "gurus" are not so much skilled at predicting the future, as they are skilled at making you forget when they were wrong.

Analysts/economists may have "more" knowledge about the past/present to make informed predictions over the "long-run" but the short-run can also be very long indeed, particularly when their predictions are wrong and people are losing money.

Dan

It's great that you guys have this new way of posting videos, but it would be even better if there were a way of accessing the video content without having to watch the video. Could you put up a transcript or something?

mgroves

I continue to enjoy being confused by the random stock footage in these videos.

zoe

I wouldn't call Greenspan lucky so much as incredibly cautious.

As for his book... throwing a few adjectives in there wouldn't have hurt matters any. It was about the most dispassionate memoir I've ever read.

omodudu

This videos can not be embedded, too bad I can not share this wth my readers.

Freddie

I don't think I would call Alan Greenspan lucky, since that implies there was no real effort involve in his predictions. I would say he had a job to do and he did it well. Is it repeatable for the next guy? Maybe. Maybe not... but then time does not roll backwards so what was predictable in the Greenspan years won't look the same for the next guy.

Arcticgoldfinger

During Greenspan's tenure at the Fed the United States ran up the largest national debt the world has ever seen. The consequences of that are going to be horrendous. Now if I went out and borrowed ten million dollars and lived the high life it would certainly look like things were booming for me. Until I had to pay the money back, of course. That is what it was like during Greenspan's tenure and it made him look like an economic genius. To his credit, Greenspan pointed out the problems that would ensue, but was ignored by Congress and the White House. So, if looking good for all the wrong reasons is "lucky," then I guess he was lucky. My advice to the world right now: buy gold.

Jasbinder

When Levitt was in London a couple of months back during his double-header with Gladwell, he hadn't at that point read Fooled by Randomness - it apparently is on his office floor somewhere. If that's still the case, then trust me, Levitt and FBR's author Nassim Taleb should get on well following the admission in the clip that economists (a group Nassim hates alongside journos) are only good at retro-fitting explanations. Maybe an appropriate collective noun is required for these hindsight-biased macro economists.