Analogy breakdown

The economy is not like a family and it’s not like a business. It’s like an economy and forcing the dynamics of macroeconomics into a pre-existing set of heuristics doesn’t exactly increase the likelihood of getting to the right answers.

Why should it be intuitive? Why should it be simple? Sometimes stuff is hard. Reminds me of one of my favourite quotes:

For every complex problem there is an answer that is clear, simple, and wrong. ~ H L Mencken

Published by David Kirk

The opinions expressed on this site are those of the author and other commenters and are not necessarily those of his employer or any other organisation. David Kirk runs Milliman’s actuarial consulting practice in Africa. He is an actuary and is the creator of New Business Margin on Revenue. He specialises in risk and capital management, regulatory change and insurance strategy . He also has extensive experience in embedded value reporting, insurance-related IFRS and share option valuation.

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