Like all of us, though few so visibly, Alan Greenspan was forced by the financial crisis of 2008 to question some fundamental assumptions about risk management and economic forecasting. No one with any meaningful role in economic decision making in the world saw beforehand the storm for what it was. How had our models so utterly failed us?
To answer this question, Greenspan embarked on a rigorous and far-reaching multiyear examination of how Homo economicus predicts the economic future, and how it can predict it better. Economic risk is a fact of life in every realm, and at every level, from government and business down to the home; whether we're conscious of it or not, we make wagers on the future virtually every day, one way or another. But, even when we're not driven by factors entirely beyond our conscious control, the maps by which we are steering are often out-of-date.
The Map and the Territory is an important attempt to update our forecasting conceptual grid using twenty-first-century technologies. It integrates the history of economic prediction, the new work of behavioural economists, and the fruits of the author's own remarkable career to offer a lucid and empirical grounding in what we can know about economic forecasting and what we can't. The book explores the roles of differences of culture, and particularly of cultural inertia, in confounding our purely fiscal expectations, and probes what we can predict about the world's biggest looming challenges - whether debt, the reform of the welfare state, the relationship of the West with China, or natural disasters in an age of global warming.
No map is entirely the territory. But Greenspan's approach, grounded in his trademark rigour, wisdom, and unprecedented context, promises at least to provide some instruments by which all of us - individuals, businesses, and the state - might, on our varied economic journeys, find the way.