Moral: Wherein we stop to pay attention to the winners of the Prize in economics.
To be truthful, the first thing noticed was a feed from The Atlantic. Derek Thompson wrote with this title: This Year's Nobel Prize in Economics was a Big, Fat Critique of Financial Media. Derke says, and I quote, "Three economists won for showing it's impossible to predict short-term stock prices." Derek goes on to poke fun at the talking heads who spend an ungodly amount of time and energy in hyping a chimerical situation (Investors I).
Well, we had a similar reaction from Niels Bohr decades ago. One could "win" only with insider information or other types of rigging.
But, it's nice to see how these three views come together. Not so nicely in the eyes of some (see comments at Marginal Revolution, such as the post of Cowen and Tabbarok). Tabbarok tries to explain Hansen's contribution. We'll not look at that, for now, but we'll get back to these fellows'work under the general guise of being more technical.
At the page provided by The Atlantic, see the comment by Alpha Wolf for an overview of the situation. From a quick read, I think that AW has a good assessment with with I would agree.
Meanwhile, we'll get back with the details of this since it's so fresh. Too, Hansen's work is right along the line of those things that can lead us astray (see Transitions). Perhaps, I'll get a chance to be more specific. The old argument is that economics (even when augmented with behavioral views, neuro-economics, or what have you) cannot be like engineering with its domains resting upon the more hard of the sciences. Now, having said that, those empirical approaches, like Hansen's, are going to be important. Too, we'll have to topsy-turvy things so as to bring in a more full model of humans and their glorious natures. Such will take inspired intuition and modeling the likes of which we haven't really seen yet. Works, like these guys, are a start. It's nice to see the work offered up for public viewing.
Remarks: Modified: 10/15/2013
10/14/2013 -- Nice, an overview of part of Hansen's work (with an example) for the general audience: Jeff Leek.
10/15/2013 -- Minsky comes to mind when thinking of markets and churn (like fog, what is it being used to hide?). We could propose a hierarchy, perhaps, starting with savers (prudent ones looking for a future payment - as in, not expecting the cheese to be moved nor to be eaten by others), investors/traders (ranging from low-risk conservatism to just below those gaming the system), speculators (again, ranges: prudent hedging, collaring, etc.), gamesters (going for broke, knowing that the prudent will bail them out), and, then, idiots. --- Aside: Jamie used "moral" while talking about his bank. Lesson to learn, therein?