Econometrics Has Been a Success Only in the Limited Sense That It Can Be Used to Prove Almost Anything

Econometrics has been a success only in the limited sense that it can be used to prove almost anything. I have always challenged seminar presenters, saying that if they let me have their data I could turn their results upside down and come up with a different conclusion. Econometrics is very useful for those wanting to prove a pre-conceived belief or find results that support an ideologically driven hypothesis. Take, for example, Brexit, which had proponents and opponents. The empirical results produced by the opponents on the effect of Brexit on the British economy of leaving the EU are all over the place but ideological bias is conspicuous. For example, the Confederation of British Industry (2013), which is against Brexit, estimated the net benefit to Britain of EU membership to be in the region of 4 per cent to 5 per cent of GDP — that is, between £62 billion and £78 billion per year. Conversely, Congdon (2014) puts the cost of Britain’s membership of the EU at 10 per cent, attributing this cost to regulation and resource misallocation. Congdon’s estimates were prepared for the United Kingdom Independence Party (UKIP), which has a strong anti-Europe stance.

—Imad A. Moosa, Econometrics as a Con Art: Exposing the Limitations and Abuses of Econometrics (Cheltenham, UK: Edward Elgar Publishing, 2017), 18.