Will computers ever be able to accurately predict the economy?

[Silver_eagle]

Will silicon based computers ever be able to accurately predict macro-, micro-, and regional economies? If they have real-time economic data, artificial intelligence, social media mining, data mining, and so many other models integrated with their computing, will they still ever be able to produce accurate models? Is it already being done (albeit not that great) (or for just one stock)?

Or will we have to wait for quantum computers?

[Spotty J]

No, they might come reasonably close most of the time, but truly accurate prediction is an impossibility. For one thing, chaos theory applies. Small things happen in unpredictable ways, and accumulate, interact, amplify, and cause feedback loops that simply cannot be predicted. It's the butterfly effect (wherein supposedly a butterfly flapping it's wings in South America can ultimately cause a hurricane in North America ... though that's an exaggeration.)

Secondly, the computer doing the simulation cannot be as smart as the whole economy because it's PART of the economy itself. The economy as a whole is a kind of supercomputer working on a complex algorithm using all the human brains and computers that are within it -- a massive multi-processor supercomputer. When you decide whether or not to buy an item at the store, you are executing part of this program yourself with your own brain, which is networked with the rest of the brains in the economy through the monetary system -- your decisions become information that is factored into the whole program, so to speak.

So the problem there is that any computer being used is PART of this system, and provides feedback to this whole system. It can never be more than a small part of the whole. Using a bigger more complex new supercomputer just makes the whole economy bigger and more complex in its processing, making the simulation hard to do accurately. Plus if an economist has access to a new supercomputer, then everyone else also has access to similar supercomputers for their own purposes, making the processing problem vastly more complex.

[r1b1c*]

Predicting the economy is impossible because (at least in a capitalist environment on developed nations) it is dictated by what people do, and that is controlled in large part by whimsical considerations. It could be easily done in poor third world countries where the economy is dictated by necessities i/e food, clothing and shelter. But in developed nations almost an impossibility, take for instance Apple as a company and it's products, Apple is worth as of today $466 billion, and last year it sold products worth $127,841,000,000.00 now, if you think about it, there is nothing Apple does that people can't live without. So, how could an artificial intelligence account for the $127 billion in goods sold by a company worth almost half a trillion when nothing of what it sells is necessary?

And that is only one of very many such companies, of course, not all as large. The economy of developed nations is in large part controlled by whimsical desires, exuberant greed and some fear.