Question: Where is the difference in the meaning between precision and accuracy most pronounced?Answer: We see it in science.
First let us look at the physical science of chemistry. Measured to the exact milliliter you added a catalyst to the beaker and then began to heat it. The desired chemical reaction did not occur despite the precision of your measurement. The amount used was precise but it was not accurate. You should have added at least 25% more of the catalyst.
Now we will move to a human science – economics.
Great is the difference between those who use empiricism and those who use the methodology of subjectivism! Clearly the empirical economist confuses precision with accuracy and even their confidence in precision is misguided. The empirical economist trusts that his or her data point is precise and accurate. First of all, it cannot be accurate because a human choice cannot be encapsulated in a point of data. Even a price paid for something means that the item purchased is worth more than the amount paid for it. No one buys something if it is not valued higher than what was given in exchange for it. And since human valuation is subjective, dynamic, and always at variance the empiricist’s data cannot be precise.
Imagine the precision of your interplay in the economy. You go to the gyro food truck and buy the combo – a sandwich and a drink. That is precisely what happens every time a combo is sold. Remember, there is no guarantee that what appears to be a pattern will continue. The owner/entrepreneur must be ever-vigilant and willing to serve the consumer.
The economics of human action that uses the methodology of subjectivism recognizes the market process as precise but not necessarily accurate. Each and every voluntary exchange is exactly that – a voluntary exchange – and that is precisely what it is. The exact wish is consummated by the voluntary exchange and this precision occurs over and over every time.
Since human knowledge is always imperfect and the economy is always in disequilibrium there is an inherent inaccuracy but what we are talking about is relative rather than some unattainable absolute (as if there was perfect knowledge) which means that the accuracy is pretty good and certainly better when there is no intervention distorting the market process signals.
In true science both precision and accuracy contribute to greater understanding, and science advances as a result. As science advances it contributes to the well-being of civilization.
Imagine the disastrous consequences if the science of chemistry merely pretended to know the difference between precision and accuracy. We are living in the Dark Ages of economics because what is passed off as economicshas neither precision nor accuracy.