So how do you make good predictions? I met “superforecaster” Michael Story, who was ranked 18th best among the 20,000 people who formed the Good Judgment team. The team took part in a competition conducted by the US intelligence community to find the world’s best forecasters. Launched in 2011, the four-year contest required the group to provide forecasts on 500 questions ranging from the future for oil prices to the financial outlook. The Good Judgment team won the tournament, reportedly outperforming even professional intelligence analysts with access to classified data.
The grading of their volunteers’ forecasting abilities was key to why Good Judgment did so well. People knew how well they were performing and were driven to improve. They were also encouraged to correct their biases and alter their world view amid changing circumstances. This self-analysis and willingness to adapt, they believe, was crucial to the team’s success.…Conclusion.
The Good Judgment team believes part of the problem is that we misunderstand the science of forecasting and look to the wrong people for predictions. If we want to know what’s happening to the economy, we think the obvious thing to do is ask an economist. But Storey says that may be the wrong approach. Forecasting is an art that is separate from the need to have specific subject knowledge. The people who were best at predicting the Arab spring, he said, were not Middle East experts. They were people who studied eastern Europe and had seen similar patterns develop there. We don’t need subject experts, we need people who are great at forecasting anything.
Adam Shaw
1 comment:
Scientists do not predict the future
Comment on Adam Shaw/theguardian* on ‘Why economic forecasting has always been a flawed science’
A theory cannot be dismissed because it cannot predict the future. Therefore, as a matter of principle, economics from Jevons/Walras/Menger to DSGE cannot be dismissed because it has not predicted crises. Neoclassical, as well as Keynesian economics, is unacceptable because it is logically and empirically inconsistent. In more colloquial terms, all models that have been built and are still being built upon the maximization-and-equilibrium axioms have to be rejected as scientific garbage and NOT for any other reason.#1
Who, in all history, has been preoccupied with prediction? Mainly two groups, (i) prophets, doomsters, apocalyptics, fear mongers, gurus, utopians, astrologers, Pythia and other oracles, rise-and-fall historians/sociologists, politicians, and (ii), people who want to make a killing in the casino of Monte Carlo or on the stock-market.
No scientist is occupied with the prediction of historical events because it is long known that “The future is unpredictable.” (Feynman)
The point is that scientists use the word prediction in a quite different sense from everyday usage. For example, Einstein deduced gravity waves from his theory in 1916 and in our days, 100 years later, they are observed. Only in the very specific sense of ‘testable hypothesis’ scientists make ‘predictions’.
All this is well-known among methodologists: “We are very far from being able to predict, even in physics, the precise results of a concrete situation, such as a thunderstorm, or a fire.” (Popper)
So Arrow’s argument that long-run weather forecasts are pointless is not a great revelation but an additional proof that neoclassical economists never understood what science is all about. And just because of this, economics has never been anything else than a cargo cult science. This, too, is well known: “Suffice it to say that, in my opinion, what we presently possess by way of so-called pure economic theory is objectively indistinguishable from what the physicist Richard Feynman, in an unflattering sketch of nonsense ‘science,’ called ‘cargo cult science’.” (Clower)
In the sense of a self-description, the Keynesian “we simply do not know” applies to economists since more than 200 years. That economists are incompetent scientists that much we know for sure — and it holds with absolute certainty for both orthodox and heterodox economists.#2, #3
So we can predict that nothing of real scientific value will ever come from these folks, in perfect analogy to the prediction of physics that pigs will never fly.#4 The problem of economics is NOT failed predictions but that it is a failed science.
Only charlatans predict the future, and only morons take them seriously.
Egmont Kakarot-Handtke
* theguardian
https://www.theguardian.com/money/2017/sep/02/economic-forecasting-flawed-science-data
#1 First Lecture in New Economic Thinking
http://axecorg.blogspot.de/2017/05/first-lecture-in-new-economic-thinking.html
#2 What is dead certain in an uncertain world: economists’ abysmal incompetence
http://axecorg.blogspot.de/2016/07/what-is-dead-certain-in-uncertain-world.html
#3 Fact of life: your econ prof is scientifically incompetent
http://axecorg.blogspot.de/2017/08/fact-of-life-your-econ-prof-is.html
#4 The Law of Economists’ Increasing Stupidity
http://axecorg.blogspot.de/2017/04/the-law-of-economists-increasing.html
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