The way you hear it told, Machine Learning, equivalently Artificial Intelligence currently is the ‘bestest’ thing ever to happen to mankind — a new capability that enables us to outdo all of man’s historical accomplishments. Not only will machine learning help us create a better world, but also that we will arrive at the dubious distinction of being the only specie on earth to not any longer have to think or be thoughtful. You see, Artificial Intelligence will do it all for us, write novels for us, seed our land with corn, teach us how to improve our sex lives, fix our children’s despair, fix homelessness in California, end the war between Israel and Hamas, help Zelensky arrive at an improved valuation of the life of each Ukrainian, reduce the time to the choice of a Speaker of the House in the USA from two weeks to four working days, and on and on it goes.
The truth of the matter? The scientific evidence shows that if you want to perform any inferential analysis, typically, that old traditional econometric workhorse— simple regressions using either of Ordinary (OLS) or Generalized Least Squares (GLS) will outperform Machine Learning. The evidence is furnished in studies, such as, Masini, Medeiros, and Mendes (2023), Makridakis, Spiliotis, and Assimakopoulos (2018), Ahmed et al. (2010), Gilliland (2020), and Coulombe et al. (2022).
The Scientific Evidence suffices to establish that Machine Learning only is the Current Great Hype.
It gets worse. In a recent publication, Obrimah (2023), I provide scientific proof that each of OLS or GLS have characterization as inferential rubrics specifically, because they do not search for data points, rather attempt to infer intentionality — objectives — that, themselves are not data points in the data sets that are analyzed.
What then about machine learning algorithms? Well, they attempt to infer patterns in data. Rather than be inferential, solely they attempt to infer sequences of actions. But if that is true, all machine learning algorithms are exercises in the formation of naive decision rules, to wit, decision rules that are repeated ad infinitum. Consider, however, that it is gospel truth, to wit, a naive strategy generates consistent returns in financial markets ‘if and only if’ markets are…