 Man vs. model? The role of judgment in forecastingStephen K. McNees New England Economic Review, 1990, issue Jul, 41-52 Abstract: This article presents evidence on the role that judgmental adjustments play in macroeconomic forecast accuracy. It starts by contrasting the predictive records of four prominent forecasters who adjust their models with those of three models that are used mechanically. The adjusted forecasts tend to be more accurate overall, although important exceptions can be found. Next the article compares adjusted forecasts with those generated mechanically by the same models. Again, with some significant exceptions, judgmental adjustments improve accuracy more often than not. ; The article closes by considering whether macroeconomic forecasters should place more or less emphasis on their adjustments relative to their models. The author finds a clear tendency for modelers to overadjust their models, illustrating what prominent psychologists have termed \"the major error of intuitive prediction.\" In short, model builders should not hesitate to adjust their models to offset models limitations but should also guard against the tendency to overestimate the value of their personal insights. Keywords: Forecasting (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:fip:fedbne:y:1990:i:jul:p:41-52 Ordering information: This journal article can be ordered from Access Statistics for this article More articles in New England Economic Review from Federal Reserve Bank of Boston Contact information at EDIRC. |
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