Why Economic Experts’ Predictions Fail

OK, I shamelessly stole the title of this post from here:

Financial Flimflam: Why Economic Experts’ Predictions Fail
http://www.scientificamerican.com/article.cfm?id=financial-flimflam

I found this article via Abnormal Returns, here:
http://abnormalreturns.com/saturday-links-confounding-factors/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+abnormalreturns+%28Abnormal+Returns%29

Now for some more shameless stealing, from the article (bolding mine):

There was one significant factor in greater prediction success, however, and that was cognitive style: “foxes” who know a little about many things do better than “hedgehogs” who know a lot about one area of expertise. Low scorers, Tetlock wrote, were “thinkers who ‘know one big thing,’ aggressively extend the explanatory reach of that one big thing into new domains, display bristly impatience with those who ‘do not get it,’ and express considerable confidence that they are already pretty proficient forecasters.” High scorers in the study were “thinkers who know many small things (tricks of their trade), are skeptical of grand schemes, see explanation and prediction not as deductive exercises but rather as exercises in flexible ‘ad hocery’ that require stitching together diverse sources of information, and are rather diffident about their own forecasting prowess.”

This article (and the quote especially) really spoke to me (maybe explainable by my own confirmation bias, but there you go).

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