Diego Zuluaga appears on BBC Radio 4's Thinking Allowed programme

Diego Zuluaga, Financial Services Research Fellow at the Institute of Economic Affairs has appeared on BBC Radio 4’s Thinking Allowed programme to discuss the idea that the nature of economics is responsible for the failure to predict the financial crisis.

In the interview Diego argues that we need to distinguish between economic analysis and the development of economic science as a way to deal with human action. Economics has been very insightful in terms of finding out how incentives affect the way people behave; how government policies affect the way that they might change behaviour through changing those incentives. However, some of the focus on forecasting has been problematic because those mathematical models has to abstract from reality, so the predictions failed dramatically.

Listen to the full interview here. Diego’s section begins at 05:33