Choose Your Weatherman With Care
This should be a short post. Weather forecasters deserve to be double-checked, as there has been a tendency among weather broadcasters to sacrifice accuracy for ratings, which can be goosed in the short run by offering a good scare.
I offer the most recent snowstorm as a partial exhibit. There is a real cost to misforecasting, as this article from USA Today points out:
The lost wages and tax revenue from stores and others businesses that shut down early Monday and kept employees home Tuesday, in anticipation of something far more … dramatic.
The vacations, business trips and job interviews disrupted by the pre-emptive cancellation of thousands of airline flights across the Northeast. The extra aggravation caused Monday by those two words that every working parent of school-age children dreads: early dismissal.
All the overkill adds up, in ways that may be impossible to tease out precisely.
Now, many actions are due to a need for caution, but caution needs to be kept in bounds, lest the costs of businesses and government grow without any value gained. Maybe my bias comes from growing up in Wisconsin, because we were always ready for bad weather, and at least in that era, rarely canceled anything in the winter.
My second observation stems from hurricane forecasting. Both the overall estimates of the number and severity of storms for the season and the individual estimates of likely severity seem to be biased high. Again, I blame the need for high ratings.
Yes, we get occasional monster years with hurricanes, like 2004 and 2005. We also get freak storms like Katrina and Sandy that cause a lot of damage from the degree of flooding that accompanies some severe storms.
As an analyst of insurance companies that insure against many of the losses that come from these storms, it has taken an iron constitution to keep from trading out of loss-exposed insurers when I think the forecast is overly pessimistic.
On a personal level, it is good to be prepared for the kinds of catastrophes common to the area in which you live, regardless of the current predictions. But where weather affects your business or your investing, I would encourage you to double-check severe weather forecasts to see if they make sense before taking actions as a result. There are costs to being wrong on each side, so be careful.