Economists are notorious for making bad predictions. There are endless examples, but the first one that comes to mind is a book written by economist Kevin Hassett and co-authors entitled Dow 36,000. The title was their prediction of where the Dow Jones Industrial Index should be based on fundamentals. The book came out in the year 2000 with the Dow at about 10,000, substantially higher than it is today. The Dow’s highest point ever was in the 14,000′s.
Roughly a year ago, as 2007 came to a close, someone I knew asked for my prediction as to “Who or what will be making headlines in 2008?” for her newsletter. My response — which seems prescient now, but looked more wrong than the Dow at 36,000 halfway through the year — was “The low price of oil.”
I’m guessing John Tierney was getting a little nervous about his highly publicized bet with Matthew Simmons for a while there, although he looks to be in pretty good shape now — Tierney just needs a barrel of oil to be below $200 in 2010. While I don’t have any money riding on it, reputation-wise I’ve been rooting for oil prices to stay low since this 2005 blog post of mine.
Impressed by my 2008 prediction, my friend asked for another prediction for 2009. I decided to quit while I was ahead.
It inspired me, however, to come up with a new Freakonomics contest. Blog readers have two days to make one-sentence predictions as to the most unexpected major news story of 2009.
At the end of the year, we will revisit these predictions and award the standard Freakonomics schwag to the winners. By that time, there might even be SuperFreakonomics schwag available.