Evidence produced within quantitative disciplines like economics and finance carries an aura of gospel. The numbers, models, and forecasts we see in economic reports and market analyses in the news and reports seem certain, authoritative, and unarguable.
Built on large data sets that are analyzed with widely accepted theories and tools, economic and financial evidence have become hugely influential in governance and business—so much so that more qualitative approaches have been sidelined.
Even political economy, the original economics, has been pushed away in favor of what’s now called ‘evidence-based decision-making’. The presumption is that numerical data is the only solid information, and that the analytical tools used in economic and market analysis are reliable.
Of course, as we know now, this faith in economic evidence can be dangerous. As markets crashed around the world during the global financial crisis of 2007–2008, confidence in all kinds of quantitative modeling crashed with them. It became evident that society’s shepherds were not to be found in the financial industry. Economics and finance need to be more skeptical about their evidence if they are to serve society well. What can be done?