We are pleased to present an excerpt from Distrust: Big Data, Data-Torturing, and the Assault on Science, a new book by Pomona College economics professor Gary Smith. The Washington Post said the book’s lessons “are very much needed.”
The fact that changes in bitcoin prices are driven by fear, greed, and manipulation has not stopped people from trying to crack their secret. Empirical models of bitcoin prices are a wonderful example of data torturing because bitcoins have no intrinsic value and, so, cannot be explained credibly by economic data.
Undaunted by this reality, a National Bureau of Economic Research (NBER) paper reported the mind-boggling efforts made by Yale University economics professor Aleh Tsyvinski and a graduate student, Yukun Liu, to find empirical patterns in bitcoin prices.
Continue reading Torturing data to predict bitcoin prices: A book excerpt