Abstract

Events regarding individuals’ preferences that do not always follow from standard measures such as “value of statistical life” or “quality-adjusted life years” as well as events that occur in some market-related settings which distort the information conveyed by price mechanisms, suggest that a notable chunk of what Hayek called “local knowledge” remains inaccessible by scientific tools and that only the individuals who interact in these local frameworks can have access to it. This casts serious doubt on the epistemic possibility of economic calculation for if events in the local world do not observe the economic models, it is hard to see how central planners can have knowledge on them. Refined modeling strategies and cutting-edge Artificial Intelligence systems do not manage to overcome this hurdle. They may provide huge datasets in a data model, but since not all events represented in the data model are embeddable in known economic models, the knowledge problem is not evaded. Even if a theory ever manages to capture all possible events as they appear in the data model then we are left with a relationship between models (the theoretical model and the data model) with no direct access to the local world and thus the problem of accessibility of local knowledge remains unresolved.