The Bigger Picture: Combining Econometrics with Analytics Improve Forecasts of Movie Success

Steven Lehrer () and Tian Xie

No 24755, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: There exists significant hype regarding how much machine learning and incorporating social media data can improve forecast accuracy in commercial applications. To assess if the hype is warranted, we use data from the film industry in simulation experiments that contrast econometric approaches with tools from the predictive analytics literature. Further, we propose new strategies that combine elements from each literature in a bid to capture richer patterns of heterogeneity in the underlying relationship governing revenue. Our results demonstrate the importance of social media data and value from hybrid strategies that combine econometrics and machine learning when conducting forecasts with new big data sources. Specifically, while both least squares support vector regression and recursive partitioning strategies greatly outperform dimension reduction strategies and traditional econometrics approaches in fore-cast accuracy, there are further significant gains from using hybrid approaches. Further, Monte Carlo experiments demonstrate that these benefits arise from the significant heterogeneity in how social media measures and other film characteristics influence box office outcomes.

JEL-codes: C52 C53 C55 (search for similar items in EconPapers)
Date: 2018-06
New Economics Papers: this item is included in nep-big, nep-ecm and nep-for
Note: TWP
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Citations: View citations in EconPapers (1)

Published as Steven F. Lehrer & Tian Xie, 2022. "The Bigger Picture: Combining Econometrics with Analytics Improves Forecasts of Movie Success," Management Science, vol 68(1), pages 189-210.

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Related works:
Journal Article: The Bigger Picture: Combining Econometrics with Analytics Improves Forecasts of Movie Success (2022)
Working Paper: The Bigger Picture: Combining Econometrics with Analytics Improve Forecasts of Movie Success (2020)
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