Economic Forecasters – Hedgehogs or foxes?

Philip Tetlock, Professor at the Haas Business School at the University of California-Berkeley, gives an excellent interview in CNN on forecasting (HT: Niranjan’s Blog). Though, I had mentioned about it in assorted links, it deserves a separate post.

What makes some forecasters better than others?

The most important factor was not how much education or experience the experts had but how they thought. You know the famous line that [philosopher] Isaiah Berlin borrowed from a Greek poet, “The fox knows many things, but the hedgehog knows one big thing”? The better forecasters were like Berlin’s foxes: self-critical, eclectic thinkers who were willing to update their beliefs when faced with contrary evidence, were doubtful of grand schemes and were rather modest about their predictive ability. The less successful forecasters were like hedgehogs: They tended to have one big, beautiful idea that they loved to stretch, sometimes to the breaking point. They tended to be articulate and very persuasive as to why their idea explained everything. The media often love hedgehogs.

Excellent. This is so true. Media loves the hedgehogs. It is also important for foxes to remain as one. What usually happens is foxes also become hedgehogs seeing the instant fame.

This actually made me think. Before crisis many experts said we are in era of great moderation and as a result everything will be stable and rising. Quite a few turned hedgehog and stretched the idea to the hilt. And the crisis hit. Now we have a large number of experts saying things are going to be very bad and have stretched this idea as well. We come across new theories nearly every week to justify why the crisis will be worse. Could this be a hedgehog as well and economies will recover sooner than expected.

The entire interview is worth a read.

One Response to “Economic Forecasters – Hedgehogs or foxes?”

  1. Michael Mussa on the art of economic forecasting « Mostly Economics Says:

    […] Economic Forecasters – Hedgehogs or foxes? […]

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