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How do you choose between economic models when they all fit the data badly?

AIC (Akaike Information Criterion) ranks competing models by balancing how well they fit the data against how many parameters they use — simpler models are rewarded. Lower AIC = better model. Unlike R², AIC is useful for comparing models even when none fits well: it tells you which is the least bad option. The power law wins on both R² and AIC vs the traditional quadratic Armey Curve across the 113-country structural sample.