Stephen Gordon at Worthwhile Canadian Initiative:
Economics and climatology: Why perfect markets are like a dishpan, Worthwhile Canadian Initiative: Brian Ferguson at A Canadian Overview makes an interesting point:
Ever wonder why so many economists are sceptical about man-made global warming? It's because we've had a lot of humbling experience with just how quickly large scale computer models can go very badly wrong. Remember when we had inflation and unemployment under control through Keynesian fine-tuning?
There are some interesting parallels between the atmospheric sciences (climatology and meteorology) and economics: they study highly complex systems, the available data are non-experimental, and their results have significant policy implications. Not surprisingly, both rely heavily on models as tools for understanding what is going on and why. Of course, models need not be based on a computer simulation, or even mathematics. As Paul Krugman notes, you can put one together using some ordinary household appliance ...[read more]...
Update: Here's another view from Michael Perelman, someone I first met long ago during my undergraduate days at CSU Chico where was a faculty member in the Economics Department: Economics as a Science of Modeling: A Skeptical View.