“They’re in the business of flattering the prejudices of their base audience and they’re in the business of entertaining their base audience and accuracy is a side constraint.”
While researching this week’s Washington Post column (Everybody loves a good story), I came across Professor Tetlock’s quote above (we have previously referenced Tetlock here, here and here).
The quote explains quite perfectly why most forecasters appear to stink at their jobs. The answer is that, all appearances to the contrary, they are not actually trying to predict the future.
Instead, they are appealing to their audience — not the broad public, but a much narrower group — generating a specific response that is belied by the apparent question.
When making forecast about where markets might be one year from now, the goal is not to accurately foretell the future. Rather, it is to create interest in trying to forecast the future, to market time, to pick stocks or funds. Specifically, to generate commission driven business. Whether the pundits are right or wrong is irrelevant — what matters is the activity their blatherings produce.
The political pundits generate campaign donations; the sports pundits create ratings excitement for a given playoff series. Even the Oscar pools / forecasters are an attempt to generate an audience.
All of this translates into a thinly veiled form of marketing. In other words, its all about Sales & Revenue, not accuracy.
It is all very meta.
Thus, it is helpful to understand that Pundits suck at what you think is their job, But its really not. The accuracy portion of what you see is irrelevant.The buzz, the marketing, the ratings, and of course, the commissions — THAT is what the true job of the Pundit is.
Suckitude: Its a feature, not a bug.
Previously:
Apprenticed Investor: The Folly of Forecasting (June 2005)
The Dangers of Non-Modeled Narrative Story Tellers (December 3rd, 2012)
Are You an Investor or a Story Teller? (April 25th, 2013)
What's been said:
Discussions found on the web: