Monday, March 4, 2013

Not better than chance

In a previous post (here), I linked to an article by noted economist Russ Roberts who warns against placing too much confidence in economic projections and predictions.  Here, I offer a related article that provides a collection of findings "dispelling some myths" about economic forecasts and predictions. Here are the first three:

1. Economists’ predictions are no better than guesses

Forecasting skill of economists is no better than guesstimates by Main Street investors.

2. Government economists often worse than guesses

Sherden discovered that predictions made by the elite economists on the President’s Council of Economic Advisors, the Federal Reserve Board, and even the non-partisan Congressional Budget Office were actually worse than guessing.

3. Long-term accuracy is impossible

The accuracy of forecasting declines the longer the lead times.
The rest of the article is here.