Sunday, August 19, 2012

Trending is dangerous

Niall Ferguson is horrified at the prospect that total Chinese GDP will catch the US in 2017.  Let us leave aside for a second the fact that if China's total GDP matches the US', its people will still be less than 1/4 as affluent, or the fact that maybe it would be a good thing if the most populace country in the world had living standards comparable to ours.  So far as I can tell, his 2017 projection comes from assuming growth in China will continue over the next several years at the same pace it has experienced since 1989.  Such projections are always problematic.

Let me give one example.  From 1890 until 1920, Los Angeles population grew by about 11 fold, from  50 thousand to 576 thousand.  If one assumed that this would continue, Los Angeles' population 90 years later, in 2010, would have been 576,000*11^3, or about 766 million, which is a shade under the population of the entire Western Hemisphere.  Its actual population is around 4 million.

Is this absurd?  Of course.  But I have been seeing similar forecasts based on similar foundations since I was in college (when a very well-known professor projected that the USSR would have a larger economy than the US by the year 2000).    This kind of "analysis" has been driving me crazy for years.


rjs said...

all compound growth projections - even 1% - have the same problem...carry them out long enough in time and they overwhelm the carrying capacity of the planet..

David Barker said...

For another example, see “Will women soon outrun men?” Nature, January 2, 1992.

Unknown said...

In some way it is, but I think it all depends on what trend is.

land for sale philippines

turesta, said...

It can be described more roughly by the number of rooms. A studio apartment has a single bedroom with no living room (possibly a separate kitchen istanbul real estate).
A one-bedroom apartment has a living or dining room istanbul property separate from the bedroom. Two bedroom, three bedroom, and larger units are common.
(A bedroom is defined istanbul properties as a room with a closet for clothes storage.)

turesta, said...

In recent years, istanbul real estate many economists have recognized that the lack of
effective real estate laws can be a significant istanbul properties barrier to investment in
many developing countries. In most societies, rich and poor, a significant fraction of the total wealth is in the form of istanbul property land and buildings.

turesta, said...

In most advanced economies, the main source of capital istanbul real estate used by
individuals and small companies to purchase and improve land and buildings is mortgage loans (or other instruments). These are loans for which the real property
itself constitutes collateral. Banks are willing to make such loans at favorable rates in large part because,
istanbul property if the borrower does not make payments, the lender can foreclose by
filing a court action which allows them to take back the property and sell it to get their money back. For investors, profitability can be enhanced by using an off
plan or pre-construction strategy to purchase at a lower price which is often the case in the pre-construction istanbul properties phase of development.

This comment has been removed by the author.
EasyGoTurkey said...

In most modern economies, the water maker of chapiter city true demesne victimized by istanbul property
individuals and miniature companies to acquire and ameliorate arena and buildings is mortgage loans (or added instruments). These are loans for which the real holding
itself constitutes corroboratory. Botanist are fain to egest such loans at affirmatory rates in oversize thing because,
metropolis property if the borrower does not form payments, the pledgee can foreclose by
filing a curtilage process which allows them to work aft the dimension and trade it to get their money hind. For investors, profit can be enhanced by using an off
direction or pre-construction strategy to acquire at a decrease price which is oft the human in the pre-construction stamboul properties phase of developing.