Tuesday, January 18, 2011

Predictions - don't trust the odd one out.... but don't trust the rest either...

Yesterday I noted that the guys who are good at predicting extreme outcomes suck at predictions anyway because they’re crying “Wolf! Wolf!” all the time. Reminded me of something I read in a book which argues that “the rest” just say the same thing as each other without being correct. From Mark Buchanan’s “The Social Atom”:

A few years ago, for example, the economics consultancy London Economics assessed the recent predictions of more than thirty of the top British economic forecasting groups, including the Treasury, the National Institute, and the London Business School. They concluded:

It is a conventional joke that there are as many different opinions about the future of the economy as there are economists. The truth is quite the opposite. Economic forecasters . . . all say more or less the same thing at the same time; the degree of agreement is astounding. The differences between forecasts is are trivial relative to the differences between the forecass and what happens . . . what they say is almost always wrong . . . the consensus forecast failed to predict any of the most important developments in the economy over the past seven years […]

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