The Value of Experts in Forecasting

People are willing to pay heavily for expert advice. Economists are consulted to tell us how the economy will change, stock analysts are paid large salaries to forecast the earnings of various companies, and political experts command large fees to tell our leaders what the future holds.

The available evidence, however, implies this money is poorly spent. But because few people pay attention to this evidence, I have come up with what I call the seersucker theory: “No matter how much evidence exists that seers do not exist, suckers will pay for the existence of seers.” JS Armstrong, The Wharton School, University of Pennsylvania

As the daily onslaught of dire economic news fills our screens, we are still regularly rewarded with an “expert” telling us they didn’t see it coming or they never imagined it would be so bad. These economists, pundits and sometimes politicians only succeed in proving how inescapably pointless their titles are and how their grasp of basic economics doesn’t seem to extend much further than paying their television licence fee.

It is intriguing to understand which parts of the recession they didn’t see coming — you might think the exponential debt boom, unsustainable house prices, soaring energy costs and a rising tax burden may all have given some indication that we were not on a course of infinite growth.

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