The ability to predict the future sounds pretty enticing, but few (if any) are any good at it. In 2005, Wharton professor Philip Tetlock studied how ‘experts’ did at forecasting, and discovered that they were only slightly better at it than, say, a dart-throwing chimp. He spent the next ten years trying to figure out what separated most forecasters from those few that seemed to have real foresight. Tetlock shared his thoughts, the subject of his book Superforecasting (published last year and co-authored with Dan Gardner) with Wharton’s online business journal Knowldge@Wharton.
In the study, Tetlock recruited volunteers from all walks of life and asked them to predict the answers to about 500 questions. He found that what makes people good forecasters is their ability to set opinions aside and concentrate on accuracy. Some things, however, are challenging even to the best. “No matter how good you are,” he says, “you’re probably not going to do a very good job predicting what the value of Google is going to be next week on the New York Stock Exchange.” Tetlock argues that when it comes to the financial markets, people tend to rely on vague “verbiage forecasts.” The dilemma, he says, is that some TV pundits can gain a following (and high ratings) because they are bold and decisive in their predictions, and their charisma makes people want to believe them. “They generate better sound bites,” Tetlock says.
He references the financial domain as perhaps the best example of where “a lot of money changes hands and is directed to people who claim to have some ability to predict the course of the financial markets. That is an extraordinarily difficult thing to do.” Tetlock believes that people should become suspicious when they are presented with forceful forecasts and argues, “the bolder the claim, the more the burden of proof should fall on a person to demonstrate that he or she has a good track record.”