Uncertainty and expert judgement

Posted: 28 October 2011 in Uncategorized
Tags: ,

I have long admired Nate Silver’s willingness to embrace uncertainty.

Fortunately, Silver has not been cowed by attacks on his critique of the hubris of supposedly expert judgement. So, he restates his case:

Experts have a poor understanding of uncertainty. Usually, this manifests itself in the form of overconfidence: experts underestimate the likelihood that their predictions might be wrong.

Examples of this can be found in numerous fields. Economics is an obvious one. In November 2007 — just a month before the economy officially went into recession — economists polled in the Survey of Professional Forecasters thought there was only about a 1 in 500 chance that economic growth would decline by 2 percent or more in 2008. (In fact, it declined by 3.3 percent).

I have only one disagreement. Silver thinks the “experts” are playing Russian roulette with their reputations when they use terms like “never” and “certain.” It seems, however, so-called experts—such as economists who did not predict the current crisis and continue to predict that a recovery is just around the corner—are rarely if ever forced to pay the price of their failed forecasts.

They may be playing Russian roulette with their reputations—but without a bullet in the chambers.

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