The authors of this book belong to the elite of British economic policymaking. John Kay has held some of the UK’s leading academic, think-tank and advisory positions. Mervyn King completed a long career at the Bank of England by serving as its governor for 10 years, spanning the global financial crisis.
Forty years after they first wrote a book together, they have joined forces again to produce a rant. An eloquent, highbrow, entertaining and enlightening rant, but a rant all the same. The authors’ bugbear is the standard approach to uncertainty in economics and related disciplines, which requires a comprehensive list of possible outcomes with well-defined numerical probabilities attached.
This is an impoverished and, at times even fraudulent, approach to decision-making, they argue. Apart from stable and repeated situations, they explain, probabilities do not exist; or they and their possible outcomes are unknowable; or all the above at once. All that probabilistic analysis does in other cases — usually where good decision-making matters most — is, at best, give a false sense of precision. By an arrogation of impossible scientific respectability, probability analysis can turn evidence-based policy into policy-based evidence.