A few weeks back we suggested that forecasting must be understood in the context of human cognitive limitations. We’ve been inundated with comments ever since. We summarise a few of them below.
Facts are a difficult concept to grasp. Facts are things that are known or proved to be true. But truth is even stranger. Scientists and mathematicians always deal in proofs. Facts and truths don’t mean anything in their worlds.
The speed of interaction, in modern life, makes it very difficult to truly “know” what’s happening. Not knowing the present surely means that it is impossible to forecast the future. Even examining the past is fraught with misgivings. The victors of war are the ones that write history. The stories of the vanquished are either never heard or never believed.
Forecasts create the illusion that the future is knowable – when it clearly is not. It is suggested that there are two types of forecasters. Those who don’t know and those who don’t know they don’t know. When thinking about forecasts we should broaden our outlook to include not just those who predict the economy and the weather but also sports tipsters; astrologers and fortune-tellers. After all a tip for the 3.30 at Cheltenham is nothing more than a future forecast; albeit with perhaps some dodgy insider information!
Forecasts usually tell us more about the forecaster than the future. Financial advisers, who predict share price movements, blow hot and cold. And the regulatory warnings supporting their predictions make it clear that the forecasters’ track record should not be considered as a guide to their future performance. No amount of sophisticated padding can hide the fact that all of our knowledge is about the past and all our uncertainties are about the future.
Many economic commentators have long held the view that worrying about the future repayment of debt and big budget deficits was silly. They contended that deficits do not matter. Some of these brave souls are having a change of heart and are being berated for it. But here at MMPI we believe that changing your mind means you’ve learnt something! And that’s good.
Understanding that nothing is certain is a far better starting point than the more common one of mistaken and unfounded “beliefs”. Accepting that randomness and chance play a real role in what’s going on is another viewpoint that is largely ignored. We witnessed two significant upsets in 2016 – Brexit and Trump. The vast majority of forecasters predicted the wrong results and have spent their time since trying to rationalise why. But MMPI readers are mindful that the future is not knowable and, therefore, the post-examination of something that was not knowable is entirely fruitless.
Perhaps for the moment we’ll leave the last word with Albert Einstein, who had the uncanny knack of seeing the future or at least theorising, using numbers and squiggles, on what it should look like; “I never think of the future, in the blink of an eye it’s the past!”