Tuesday, February 07, 2012

Crystal ball malfunction

No surprise to me that yet again alleged experts were wrong in their guesses predictions.

Just about all of them told us that the RBA would reduce rates at their meeting today. No doubt about the reduction, it was just the amount on which there was some disagreement.

The RBA left the rate unchanged.

It surprises me that the media perseveres with asking 'experts' what's going to happen in the future. Whether it's interest rates, the economy, the outcome of elections or the result of a football match, the odds are that they'll make the wrong call.

2 comments:

Richard Barnes said...

It surprises me that the media perseveres with asking 'experts' what's going to happen in the future. Whether it's interest rates, the economy, the outcome of elections or the result of a football match, the odds are that they'll make the wrong call.

I would think that forecasting is a useful activity, particularly in relation to planning, as long as there is appropriate amount of caution attached to any reliance on a forecast?

I'm not sure I agree that "odds are" experts do make the wrong call. It's the wrong calls that are remarked upon, right calls will generally go unnoticed. But I guess we need empirical evidence to back up our contentions, and this I do not have.....

Still, I think the media would be quite dull if it did not report predictions of one sort or another, wouldn't you agree?

Seabee said...

Not sure that I agree it's the wrong calls alone that are remarked upon, Richard.

With the RBA decision for example, 3 out of 27 'experts' polled by Bloomberg got it right...and they've had more coverage than the 24 who made the wrong call.

Same with the GFC; the handful of pundits who correctly predicted it, such as Nouriel Roubini, have become famous.

In a business sense I agree with you about forecasting. But I'd prefer the media to not have an obsession with promoting the predictions of 'experts' and I certainly don't think that would make the media duller than it is.