Machine Learning for Economics and Finance in TensorFlow 2: Deep Learning Models for Research and Industry

© Isaiah Hull 2021

I. HullMachine Learning for Economics and Finance in TensorFlow 2https://doi.org/10.1007/978-1-4842-6373-0_2

2. Machine Learning and Economics

Isaiah Hull¹  

(1)

Nacka, Sweden

 

Machine learning is primarily oriented toward prediction, whereas much of economics is concerned with causality and equilibrium. While the two disciplines have a shared interest in forecasting, they often approach it with different preferences and objectives. The economics discipline tends to favor forecasting models that are explicable, parsimonious, and stable, whereas machine learning uses an empirical process for determining what is included in a model, prioritizing feature selection, regularization, and testing over intuition.

As a consequence of these ...