Computer Modelling Limitations

Our reliance on computer modelling has demonstrated the fragility of the conclusions which stem from initial choices of assumptions, variables, etc. Models are only as good as the assumptions that went into them, ie if the assumptions are wrong, so are the predictions. Situations can change that make assumptions no longer applicable. No model is perfect, ie

i) economists forecasting recessions - in the 1990s, of the 60 recessions around the world, only 2 had been predicted 12 months in advance

ii) If the US Federal Reserve's forecasts had been realised over the last 4 years, then by 2014 the US economy should have been $US 1 t. larger

iii) most projects take longer to complete than planned and are over-budget

Our reliance on computer modelling has demonstrated the fragility of the conclusions which stem from initial choices of assumptions, variables, etc. Models are only as good as the assumptions that went into them, ie if the assumptions are wrong, so are the predictions. Situations can change that make assumptions no longer applicable. No model is perfect, ie

"...models that work today can break tomorrow, with no warning and no explanation..."

James Weatherall, 2013

 

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