I'm reposting this here --

[rogerashton]

I have a feeling the subject line I gave it on GD misrepresented it -- considering some other recent posts.

Gains from trade and increases of the standard of living are underestimated by conventional statistics because they do not allow for increases in variety.
http://www.nytimes.com/2004/06/17/business/17scene.html
Where is my cup of Viennese-roast Tanzanian Peaberry coffee, dammit?

[Maurkov]

1. This illustrates why economics is hard

You lose information when you aggregate your data, so the only really accurate economic model is reality. The trick is finding out which simplifications result in the smallest distortions. It's neat to see that adding information back into the model better explains the real world behavior.

That computers are getting tough enough to handle such complexity is heartening. In not too many years, I expect social sciences to get a lot less fuzzy. I suppose if they can model nuclear explosions, modeling international markets can't be far behind.