“New Learning” Barnard’s Inn Hall Holborn London EC1N 2HH Tel: +44 (0) Fax: +44 (0) © Gresham College 2008 Mercers’ School Memorial Professor of Commerce Michael Mainelli Perfectly Unpredictable Why Forecasting Produces Useful Rubbish
© Gresham College 2008 Outline Fracticality Forecasting exercise Forecasting hurricanes Fair distribution Forecasting forecasting “Get a detailed grip on the big picture.” Chao Kli Ning
© Gresham College 2008 Digitising – Circa 1983
© Gresham College 2008 Not To Scale 1946 OS map London SE sheet 171, 1 inch = 1 mile, 1:63,360 1:625,000 (yes I know, samples of scale, not their scale on this slide!)
© Gresham College 2008 Don’t Generalise - From 491 To 18
© Gresham College 2008 Digitality
© Gresham College 2008 Engineers Like To Do It With Curves
© Gresham College 2008 Real versus Fake
© Gresham College 2008 Fracticality
© Gresham College 2008 Supremely Engineered Fakes?
© Gresham College 2008 Ulstermate Accuracy [Jodocus Hondius, ] [Andrew Dury, London, 1764]
© Gresham College 2008 Left or Right Exercise - 1
© Gresham College 2008 Left or Right Exercise? - 2
© Gresham College 2008 Left or Right Exercise - 3
© Gresham College 2008 Unusual Success 7/75/7
© Gresham College 2008 Scientific Method [
© Gresham College 2008 Phillips’ Economic Computer
© Gresham College 2008 Financial Hurricanes
© Gresham College 2008 Fair Distributions Poisson Erlang Normal Power Law
© Gresham College 2008 Fans of Charts
© Gresham College 2008 Dynamic Anomaly & Pattern Response
© Gresham College 2008 Prediction Markets Matter
© Gresham College 2008 Qualitative versus Quantitative
© Gresham College 2008 Model or Module?
© Gresham College 2008 Forecasting Probabilistic forecasting Dynamic anomaly & pattern response Predictive markets Qualitative versus quantitative “The model is the message”
© Gresham College 2008 Discussion 1. Does the qualitative versus qualitative forecasting distinction hold true? 2. Will increasing indirect impacts through information technology make self-fulfilling prophecies more likely? John William Waterhouse The Crystal Ball (1902, oil on canvas)
© Gresham College 2008 Perfectly Undpredictable: Why Forecasting Produces Useful Rubbish Thank you! “Get a big picture grip on the details.” Chao Kli Ning