June, 2004

Aggregation, Emergence and Economic Development

  • Stephen Daley

Key materials
Contact us
To speak with a scholar or learn more on this topic, visit our contact page.

The world is full of well-meaning economists who believe intervention will do the trick if we can just get the right policy mix. But this belief is built upon the premise that our macro models are capturing enough of the real world so that interventions can be well crafted in an attempt to realize their goals, be that development or cyclic stabilization. Too much of the measuring of success relies upon aggregative statistics, which have become the de facto benchmark. But these aggregated measures have become much more than just information. They have become the very target a given policy is attempting to change. In this working paper, Dr. Daley argues that this approach is flawed for two distinct but interrelated reasons. First, the aggregated variables are taken as a representation of reality. Second, the aggregated variable is mistakenly seen as something upon which the policy maker can directly act upon or change.