Saturday, 3 May 2014

Paul Kelly's strange logic on forecasts

Just choose your forecast to fit your prejudice. That seems to be the view of Paul Kelly writing in The Australian this morning:
The value of the audit commission is proved by the firestorm it has generated. It is not written by politicians. Freed from such political constraints it can launch the national debate Australia needs to conduct.
Anybody who doubts this should consider the business-as usual projections showing the budget stays in deficit for a decade and beyond. This may be based on conservative forecasts but conservative forecasts are necessary after years of forecasting failure on the optimistic side.
Conservative forecasts are necessary? Really? Surely if we are going to be in the forecasting business at all we should be making our best guess? Otherwise it is just a nonsense.
The caution we show should be the realisation that our best guess most probably will turn out to be wrong - sometimes too pessimistic and sometimes to optimistic. Then when we are wrong we change.
Post a Comment