Subjective Probabilities and Short‐Term Economic Forecasts: An Empirical Investigation

F. M. O'Carroll

Journal of the Royal Statistical Society Series C, 1977, vol. 26, issue 3, 269-278

Abstract: Subjective probabilities for one‐week forecasts of five series (F.T. Share Index, dollar–sterling rate and three oil price series) were obtained from a panel of BP personnel in 18 successive weeks. Two kinds of form were completed on alternate weeks by each subject, one requiring probabilities of given percentage changes (A) and one requiring percentiles (B). Average results for 23 participants show a bias towards central values on both forms, smaller on A than B. The main feature shown by analysis of variance was marked variation between participants, consistent over series and forms, and not associated with discipline or professional interest. On a logarithmic scoring rule the average performance was the same on the two forms, but subjects with smallest central bias scored slightly better on Form B. Subjective distribution shapes showed no consistent pattern.

Date: 1977
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