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The forecasting fallacy (2020)

alexmurrell.co.uk

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Re: The forecasting fallacy (2020)

#51

Post by paulpauper »

diab0lic wrote: post #37

Much of the discussion here including the linked article fail to make an important distinction between domains. Prediction can be done quite effectively on thin tailed processes. A lot of the counter examples listed in the comments here are physical systems which are thin tailed. I see aircraft autopilot, collision detection, ozone depletion. These are all well understood physical phenomenon in which large deviations…

the article was not that good overall. people who do this stuff for a living do not take such a naive or reductionist approach to forecasting.

Re: The forecasting fallacy (2020)

#52

Post by kqr »

cesaref wrote: post #16

If you want a counter example, go and investigate algo trading hedge funds - you'll find they do a pretty solid job of predicting the future. Sure, some of them predict only a few ms into the future, some a few minutes (the one I worked for was in that category) and others will do interday strategies. I'm pretty sure there are examples which have a track record of decent returns above the markets they trade in with l…

Another field that meticulously tracks their forecasting performance are meteorologists. Jokes about them aside, they do a smashing job of something really hard.

Also we are some hobbyist predictors who try our abilities out on all sorts of questions at metaculus.com. Highly recommend to get a sense of how good some people are at prediction.

Re: The forecasting fallacy (2020)

#53

Post by cheschire »

civilized wrote: post #21

There's a germ of insight here that could use some development and nuancing. > The future is uncertain. You cannot predict it. But you can create it. For millions of years, prediction has been the engine by which humans have created the future. We don't always call it that, but prediction is the engine. Let's start from the most basic facts of life. We know from experience (our own and others') what plants will susta…

Really? I think rather than prediction as our future creating engine, it's been critical thinking and problem solving.

Most inventions are solutions to problems, not solutions in search of problems. Industrialization was in response to a need to scale up production. The internet was in response to a discoverability problem. Smartphones were in response to a need to do personal computing on the go.

Monetizing those things was the inflection point for success in all those cases, but even prior to monetization most human ingenuity has been based in problem solving.

Which is looking backwards. Not forwards.

Re: The forecasting fallacy (2020)

#54

Post by wslh »

wslh wrote: post #2

I like the article but not the final conclusion "We can’t predict much at all", I think we can predict more than we think, it is similar to asking if the glass is half empty and half full. For example, sci-fi, scientists, and some economists have predicted a lot of things before but we don't have an accurate time of happening: one thing is to predict an event for next year and another see a trend that will happen in…

Randomly, today's Fred Wilson's "What Happened In 2023" post [1] includes the following content: "...The second is the emergence of a new tech megatrend, AI, which has been developing in front of our very eyes for as long as I have been in tech, so that is over forty years now."

[1] https://news.ycombinator.com/item?id=38825073

Re: The forecasting fallacy (2020)

#55

Post by kqr »

mcshicks wrote: post #50
kbrkbr wrote: post #11

Earlier quoted context omitted.

I agree with the assessment that there are not many systems we can predict 10 years out with great confidence, specifically geopolitics. But I do not think I painted much of a picture of Tetlock's results. I read the article as concluding: let's stop predicting, it does not work. Let's start building. (After stating we cannot predict this, and we cannot predict that.) And I think Tetlock"s result contradict that, as…

I have a graph from "Expert Political Judgement" that I've kept on a cork board for over a decade. It's from page 55 in my edition. It charts "Objective Frequency" vs "Subjective Probability" It has three curves, Experts (people in Government, paid to make political assessments), Dilettantes (people who are well read, read NYT, WSJ and the like), and College Undergrads. The Expert and Dilettante lines are more or les…

Right, and then he followed this up with Superforecasters which is all about the people who are on that 45 degree line. They exist! They just aren't popular.

Re: The forecasting fallacy (2020)

#56

Post by adrianN »

hamilyon2 wrote: post #29

Isn't inability to accurately predict some economic metrics consequence of efficient market hypothesis? All available and some unavailable information is already reflected in market. So, sum of reasonable guesses of next year GDP more or less is today's market index. Anything over that is some baseless speculation with no skin in the game.

Afaik the efficient market hypothesis says nothing about how long the market takes to optimize after new information is available (and I believe the market needs to solve an np-hard optimization problem). So in principle you could beat the market, by using a better algorithm or more compute.

Re: The forecasting fallacy (2020)

#58

Post by kqr »

hef19898 wrote: post #18
qznc wrote: post #13

Earlier quoted context omitted.

I agree. The article succumbs to a False Binary Fallacy, where forecasts are either correct or wrong. The real question about forecasts is how certain they are. https://en.wikipedia.org/wiki/False_dilemma

First rule of forecasts in supply chain management: the forecast is always wrong. And still people ignore that cardinal, and a lotnof smaller, rules all the time.

Right or wrong is not the measure by which to evaluate forecasts, just as it's not the appropriate yardstick for models.

Re: The forecasting fallacy (2020)

#59

Post by troupe »

snowwrestler wrote: post #35
troupe wrote: post #27

Earlier quoted context omitted.

> The author would also conclude: > The prediction that Y2K would happen was a bad one since it didn't happen. (We spent billions of dollars to make sure it didn't.) I would argue that we don't really know what would have happened had the world not spent all the money on upgrading systems. It appears a very large number of them would have continued to work as expected and it isn't immediately clear if the ones that w…

The people who were working on Y2K did know what would happen in many cases. Their work avoided known huge messes in banking, infrastructure, aviation, and healthcare, among others. What they didn’t do, much, is write or blog about their work. A lot of fixes were to commercial or government systems running on commercial or government hardware. Publicly disclosing problems and fixes was not part of those cultures. So…

I was part of that remediation effort in the healthcare sector. And yes there were things that were fixed that prevented problems. However, given how many things were not fixed, it is amazing how few problems actually happened. (Someone got charged for 100 years of late library fees...)

Is that because we found and patched all the systems that would have actually had a problem? Maybe. I'm guessing it is because many of the things that were fixed, wouldn't have actually caused any signifiant problem--at least not at the scale that was being predicted.

But as you point out, if there were any systems that would have failed in a catastrophic way, those were evidently fixed.

Re: The forecasting fallacy (2020)

#60

Post by civilized »

cheschire wrote: post #53
civilized wrote: post #21

There's a germ of insight here that could use some development and nuancing. > The future is uncertain. You cannot predict it. But you can create it. For millions of years, prediction has been the engine by which humans have created the future. We don't always call it that, but prediction is the engine. Let's start from the most basic facts of life. We know from experience (our own and others') what plants will susta…

Really? I think rather than prediction as our future creating engine, it's been critical thinking and problem solving. Most inventions are solutions to problems, not solutions in search of problems. Industrialization was in response to a need to scale up production. The internet was in response to a discoverability problem. Smartphones were in response to a need to do personal computing on the go. Monetizing those th…

How do critical thinking and problem solving work?

How do we evaluate potential courses of action, if not by predicting their consequences?

I showed how prediction is involved in a basic example from everyday life. Do you dispute that?

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