Tom Freeman and Chris Dillow explain why I’m wrong about binning Treasury projections and forecasts.
Dillow:
“So, if we assume that the £173bn forecast for PSNB in 2010-11 is the central point of the projection, a range forecast would take the form of saying something like: “There’s a roughly two-thirds chance PSNB will be within the range £143-£203bn, and a one-in-six chance it will be below this, and a one-in-six chance it’ll be above it.”
It would, however, be impossible for a government to do this. Every know-nothing numbskull and opportunist would claim that this is not what it is – a sensible recognition of the fact that the economic future is inherently unpredictable – but rather a confession of ignorance.”
Freeman:
“what role do these forecasts serve?
I think their main purpose is as media fodder. A specific number is much easier to communicate than a probability distribution, and for the media reporting a prediction, it does show that they know things in detail…
…Which means that the reason politicians keep doing this is that they hope their own set of guesstimates will get picked up and used in questions to needle the other lot.
Oh, how edifying. Another way in which the news media and the political parties are symbiotic upon each other, and jointly parasitic upon the rest of us.”
Being accused of idealistic naivete is both novel and refreshing.
Usually I’m the one patiently saying “yeah, but things don’t work like that”.
(God, I’m stealing a lot from Brad Delong)
4 Comments
July 4, 2009 at 5:26 pm
I was agreeing with you!
July 4, 2009 at 5:45 pm
nah, you’re right about why it happens, which is why it won’t change… you agree with the sentiments, but explain why they aren’t sufficient!
July 5, 2009 at 8:45 am
I was agreeing too – I was explaining, not justifying.
July 5, 2009 at 8:30 pm
Group hug …..of course we know why your little coven is suddenly so impressed with the vaguaries of predictions . Did I spoil the magic ?