Why economic models have gone out of the window

While never easy, investing used to be a fairly straightforward business. Now it is anything but that, says Merryn Somerset Webb.

I had a good economics teacher at school, so I went on to study the subject at university - but by the end of the first year I was lost. Gone were conversations about how people as a group might or might not behave in any given situation and the stories of the emotions behind the graphs; in their place were endless lessons on econometrics and statistics backed up with increasingly complicated graphs and equations.

This stuff is pretty important there's no point in being an economist if you can't manipulate statistics and, of course, an excellent grounding in mathematics is vital in every area of life. But it's also only half the story. Economics is as much about behaviour as numbers, and models of all sorts can be destroyed by changes in the way people behave - as we have discovered in the past few years.

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Merryn Somerset Webb

Merryn Somerset Webb started her career in Tokyo at public broadcaster NHK before becoming a Japanese equity broker at what was then Warburgs. She went on to work at SBC and UBS without moving from her desk in Kamiyacho (it was the age of mergers).

After five years in Japan she returned to work in the UK at Paribas. This soon became BNP Paribas. Again, no desk move was required. On leaving the City, Merryn helped The Week magazine with its City pages before becoming the launch editor of MoneyWeek in 2000 and taking on columns first in the Sunday Times and then in 2009 in the Financial Times

Twenty years on, MoneyWeek is the best-selling financial magazine in the UK. Merryn was its Editor in Chief until 2022. She is now a senior columnist at Bloomberg and host of the Merryn Talks Money podcast -  but still writes for Moneyweek monthly. 

Merryn is also is a non executive director of two investment trusts – BlackRock Throgmorton, and the Murray Income Investment Trust.