Wrong Again: Why Experts’ Predictions Fail, Especially About the Future
Posted: 1/5/12 12:03 AM ET
With the first week of 2012 upon us it is time to reflect on that favorite pastime of soothsayers and scientists alike: predicting the future. At Skeptic magazine we routinely publish articles about the failed predictions of soothsayers, astrologers, tarot-card readers, palm-readers, and psychics of all stripes. But frankly scientists are not much better, especially in the social sciences where we depend on predictions of psychologists, sociologists, and most notably economists.
In his Newsweek column for September 19, 1966, the economist Paul Samuelson lamented that when it comes to predicting Gross National Product, “commentators quote economic studies alleging that market downturns predicted four out of the last five recessions. That is an understatement. Wall Street indexes predicted nine out of the last five recessions!” Economists’ prediction track record has only gotten worse since, along with the prediction-to-outcome ratio, which I have seen at 10:3, 7:2, and even 9:0 — yes, economists predicted 9 of the last 0 recessions. With such bestsellers as The Great Depression of 1990 and Dow 36,000, economic forecasters have proven themselves time and again to indistinguishable from astrological soothsayers.