Philip Tetlock – The Perilous Task Of Forecasting via The Wall Street Journal
Wharton’s Philip Tetlock on how forecasters can do better
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To get business right, finance chiefs need to be good forecasters. Yet research has shown that amateurs can actually be better than experts at predicting the future.
Jason Zweig, The Wall Street Journal’s investing columnist, sat down with Philip Tetlock, a professor at the University of Pennsylvania’s Wharton School and the co-author of “Superforecasting: The Art and Science of Prediction,” to explore why that is and what companies can learn from it.
Edited excerpts follow.
Jason Zweig: Why is it so hard for experts to make forecasts about things in their own domain of expertise?
Philip Tetlock: One reason is that experts sometimes know too much. I was talking once to John McLaughlin, former director of the CIA, about the end of the Cold War period, and he was remarking that the analysts who were slowest to recognize that East Germany was disintegrating were the people who had been on the case for 20 years.
It was the newbies coming in who got it pretty quickly. And there’s a lot of psychological evidence that attests to the power of preconceptions to grip us and make it hard for us to be timely belief updaters. So sometimes knowledge is actually an impediment. Another big factor is that there is a large amount of uncertainty in the world. So no matter how smart you are, it isn’t going to give you a lot of traction.
Jason Zweig: Because luck and randomness are such powerful forces?
Philip Tetlock: Yeah. They aren’t totally dominant, but they’re powerful forces. And forecasters who don’t take them into account do so at their peril.
Jason Zweig: After the invasion of Iraq, the U.S. intelligence community did a lot of soul searching. And part of that was the project that you got involved in and that you write about in your book. Tell us what you were asked to do.
See the full article here.