'Economics is not a crystal ball': PM Wong urges economists to stay grounded as AI advances

Prime Minister Lawrence Wong has urged Singapore's economists to exercise sound judgment and recognise the limits of increasingly sophisticated analytical tools, including artificial intelligence.

Speaking at the 25th anniversary celebration of the Economist Service (ES) on Wednesday (Sept 30), PM Wong said economists should not become overly reliant on forecasting models or technical tools when advising on policy.

"Economics is not a crystal ball," he said, noting that economic models are simplifications of reality and cannot fully account for shocks, technological advances and changes in how people and businesses behave.

PM Wong also warned economists against being "captive to an ideology" or to technical methods, saying analysis should be used to test ideas rather than simply support pre-determined conclusions.

"The most enduring value of economics lies not in any particular theory, model or technique. It lies in a way of thinking," said PM Wong.

Rather, he said economists should remain guided by three enduring principles: that prices, costs and incentives matter.

"These basic principles of economic thinking have stood the test of time. They help us think more clearly about our choices - the trade-offs involved, the incentives we create, and the consequences that follow," said PM Wong.

Economist Service to build new capabilities

The event, which was held at Parkroyal Collection Pickering, also featured reflections from economists on how economic analysis is used to inform policy and respond to emerging challenges.

Speaking to AsiaOne on Wednesday, Dr Tan Di Song, senior lead economist at the Ministry of Trade and Industry, said economists play an important role in helping the Government identify emerging risks and make evidence-based policy decisions.

"When applying economic models and frameworks to policymaking, we always must ask, 'What are we missing?' and 'How can we account for these other complications?'" said Dr Tan.

He also stressed that economists need to balance technical rigour with clear communication, so their findings can be easily understood and applied by policymakers.

Speaking at the event, chief economist Yong Yik Wei said the ES would deepen its capabilities in response to emerging policy challenges.

"To meet these needs, the ES will deepen our capabilities in market design and regulatory economics and structural economic modelling," said Yong.

"This entails setting up units within MTI as centres of expertise to work with agencies and systematically develop a pool of ES officers with the relevant expertise."

The ES is also studying how big data and AI can be used responsibly and effectively in economic surveillance and research, while strengthening its links with universities and international organisations, Yong said.

Preparing for greater uncertainty

PM Wong said the principles of economic thinking will become increasingly important as Singapore faces greater global uncertainty and disruption from AI and technological change.

"Singapore has never taken a laissez-faire approach. The Government intervenes actively in many areas," he said, adding that intervention must be carefully designed, with policymakers assessing incentives, costs, trade-offs and possible second- and third-order effects.

These considerations will become increasingly important as Singapore faces greater global uncertainty and disruption from AI and technological change, PM Wong said.

While economic restructuring can drive innovation and growth, workers whose jobs are displaced may face immediate and personal costs.

The Government must therefore help those affected by change and ensure the benefits of growth are broadly shared, while remaining mindful of the unintended consequences of policy interventions, he said.

He encouraged economists to make full use of new capabilities such as AI, high-frequency data and advanced empirical techniques, while recognising that "better tools" do not necessarily lead to "better judgment".

"What matters is not how large the service becomes," PM Wong said in closing. "It is the quality of thinking you bring to Government, and the difference you make to Singapore."

xingying.koh@asiaone.com

新加坡总理黄循财敦促新加坡经济学家运用合理的判断力，认识到日益复杂的分析工具（包括人工智能）的局限性。

黄循财总理周三（9月30日）在《经济学人》杂志社（ES）成立25周年庆典上发表讲话时表示，经济学家在提出政策建议时不应过度依赖预测模型或技术工具。

“经济学不是水晶球，”他说道，并指出经济模型是对现实的简化，无法完全解释冲击、技术进步以及人们和企业行为方式的变化。

黄英贤总理还警告经济学家不要“受制于某种意识形态”或技术方法，称分析应该用来检验各种想法，而不是仅仅支持预先设定的结论。

黄循财总理表示：“经济学最持久的价值不在于任何特定的理论、模型或技术，而在于一种思维方式。”

他表示，经济学家应该始终遵循三个永恒的原则：价格、成本和激励机制都很重要。

黄循财总理表示：“这些基本的经济思维原则经受住了时间的考验。它们帮助我们更清晰地思考我们的选择——其中涉及的权衡取舍、我们创造的激励机制以及随之而来的后果。”

经济学人服务社将构建新的能力

此次活动在皮克林帕克罗亚尔精选酒店举行，经济学家们还就如何利用经济分析来指导政策制定和应对新出现的挑战发表了看法。

贸工部高级首席经济学家陈迪松博士周三在接受AsiaOne采访时表示，经济学家在帮助政府识别新兴风险和制定基于证据的政策决策方面发挥着重要作用。

“在将经济模型和框架应用于政策制定时，我们必须始终问自己：‘我们遗漏了什么？’以及‘我们如何解释这些其他复杂情况？’”谭博士说。

他还强调，经济学家需要平衡技术上的严谨性和清晰的沟通，以便政策制定者能够轻松理解和应用他们的研究成果。

首席经济学家杨益伟在活动上表示，经济战略将深化自身能力，以应对新出现的政策挑战。

Yong表示：“为了满足这些需求，ES将深化我们在市场设计、监管经济学和结构经济建模方面的能力。”

“这意味着要在MTI内部设立专业中心，与各机构合作，系统地培养一批具备相关专业知识的ES官员。”

永表示，经济安全局也在研究如何负责任、有效地将大数据和人工智能应用于经济监测和研究，同时加强与大学和国际组织的联系。

为更大的不确定性做好准备

黄总理表示，随着新加坡面临人工智能和技术变革带来的日益增长的全球不确定性和冲击，经济思维原则将变得越来越重要。

“新加坡从未采取过自由放任的态度。政府在许多领域都积极进行干预，”他说道，并补充说，干预必须经过精心设计，政策制定者需要评估激励措施、成本、权衡取舍以及可能产生的二阶和三阶效应。

黄循财总理表示，随着新加坡面临人工智能和技术变革带来的更大全球不确定性和冲击，这些因素将变得越来越重要。

经济结构调整虽然可以推动创新和增长，但失业工人可能会面临直接的个人损失。

他表示，因此政府必须帮助那些受变革影响的人，并确保增长的成果得到广泛分享，同时也要留意政策干预可能带来的意想不到的后果。

他鼓励经济学家充分利用人工智能、高频数据和先进的实证技术等新技术，同时也认识到“更好的工具”并不一定能带来“更好的判断”。

黄循财总理在总结发言中说：“重要的不是政府规模有多大，而是你为政府带来的思维质量，以及你为新加坡做出的贡献。”

邢莹.koh@asiaone.com