On 29/04/09 08:14, Michael Batty wrote:
> I was at the meeting where Scott raised this issue. Alan Wilson said
> that his company GMAP was built on developing spatial interaction models
> for predicting short term shifts in retailing activity which routinely
> produced predictions that were close to the mark. There are no better
> examples than the large retail units that routinely - every week - run
> their models to make predictions in retail markets and reportedly they
> produce good predictions.
It is by no means unusual for model-based forecasts to be sufficiently
accurate that the error is less than the value of the variable and
perhaps much less. What systematically does not happen (and I know of
no counterexample at all) is correct forecasting of volatile episodes
such as big shifts in market shares in retail sales, macroeconomic
recessions or recoveries, the onset of bear or bull phases in financial
markets.
Policy initiatives are usually intended to change something from what
has gone on before. Democratic governments -- executive and legislative
branches -- typically investigate the reasons for choosing one policy
rather than another or, at least, justify a proposed policy before
implementation. Sometimes these justifications are based on forecasts
of impacts derived from models. Certainly this is happening now in
relation to the current recession. So the question is not whether there
are ever correct forecasts. Certainly on the minimal criteria I
suggested, there are many. The question is strictly about forecasts of
policy impacts which, I conjecture, are rather like other major shifts
in social trend and stability.
I believe this particular question is important because I don't
understand the point of policy modelling if we cannot usefully inform
policy formation. If the usefulness we claim is that we can evaluate
policy impacts and, in point of fact, we systematically (or always)
produce incorrect forecasts of the direction and/or timing of intended
changes, then it seems hard to argue that this is a useful exercise.
Scott Moss
|