Our “Folly of Prediction” podcast made these basic points:
Fact: Human beings love to predict the future.
Fact: Human beings are not very good at predicting the future.
Fact: Because the incentives to predict are quite imperfect — bad predictions are rarely punished — this situation is unlikely to change.
A couple of recent cases in point:
The National Oceanic and Atmospheric Administration predicted a particularly bad Atlantic hurricane season this year but, thankfully, were wrong, as noted by Dan Amira in New York magazine. It is hard to imagine that many people are unhappy about that.
There were 43 experts in the poll. Not a single one of them picked either the Cardinals or the Red Sox to make it to the World Series. Granted, both teams were a bit of a surprise — but that’s my point: you would have done better placing one bet on each of the 30 MLB teams to make the Series rather than rely on the experts’ picks.
What is amazing is how much consensus there was among the picks — the Washington Nationals and Detroit Tigers, for instance, were very popular picks to make or win the Series. Sure, both teams looked good on paper but the degree of consensus in these picks should remind us all of just how much herding there is when experts make predictions.
I didn’t run all the numbers — you are free to do so — but the first example I looked at is pretty sobering. Twenty of the 43 experts picked the Toronto Blue Jays to win the A.L. East. How’d the Jays do? Dead last in their division, with a 74-88 record, 23 games behind the Red Sox — who, by the way, were picked by zero of the 43 pundits to win even their division, much less the A.L. or the World Series.
Question: how much do you think this poor outcome will discourage the same pundits from making their picks next spring?
Note: PunditTracker is keeping track of some of this mess.