Predictive economics: Rethinking economic methodology with machine learning

• URL: http://arxiv.org/abs/2510.04726v1
• Date: Mon, 06 Oct 2025 11:46:03 GMT
• Title: Predictive economics: Rethinking economic methodology with machine learning
• Authors: Miguel Alves Pereira,
• Abstract summary: This article proposes predictive economics as a distinct analytical perspective within economics.<n>It is grounded in machine learning and centred on predictive accuracy rather than causal identification.
• Score: 3.2895195535353317
• License: http://arxiv.org/licenses/nonexclusive-distrib/1.0/
• Abstract: This article proposes predictive economics as a distinct analytical perspective within economics, grounded in machine learning and centred on predictive accuracy rather than causal identification. Drawing on the instrumentalist tradition (Friedman), the explanation-prediction divide (Shmueli), and the contrast between modelling cultures (Breiman), we formalise prediction as a valid epistemological and methodological objective. Reviewing recent applications across economic subfields, we show how predictive models contribute to empirical analysis, particularly in complex or data-rich contexts. This perspective complements existing approaches and supports a more pluralistic methodology - one that values out-of-sample performance alongside interpretability and theoretical structure.

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