Tuesday, December 30, 2008

Prediction by Experts

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I continue to be impressed by what Taleb has to say in The Black Swan and how it can be applied in real life. (One immediate impact on me has been the reduction of TV viewing time. That helps me a great deal in the domestic front too.)

In any case, this is about how good (or poor) are predictions by experts.

[Psychologist Philip] Tetlock studied the business of political and economic "experts." He asked various specialists to judge the likelihood of a number of political, economic, and military events occurring within a specified time frame (about five years ahead). The outcomes represented a total number of around twenty-seven thousand predictions, involving close to three hundred specialists. Economists represented about a quarter of his sample. The study revealed that the expert's error rates were clearly many times what they had estimated. His study exposed an expert problem: there was no difference in results whether one had a PhD or an undergraduate degree. Well-published professors had no advantage over journalists. The only regularity Tetlock found was negative effect of reputation on prediction: those who had a big reputation were worse predictors than those who had none.

Now this is interesting as I have made some predictions for 31st December 2009 and I am no expert.

But what is more important is to check out the predictions made by economists on the present crisis. I have seen in innumerable news reports that the present economic crisis is likely to last throughout the 2009 and most possibly into the first few months of 2010. The good news: these predictions were made by experts. So, they are bound to be wrong. The bad news:, they could err on both sides: perhaps the economic gloom will lift with the next few months ... or last for the next few years.

Ditto with the environmental predictions.

In any case, you can track my predictions by subscribing to it. We shall know by end-2009, how far I was from reality.

Note: The picture used here belongs to Gabriel Bulla. For more such pictures visit his gallery.

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