You can't forecast individuals
On the Storm Prediction Center, market prediction schemes, and why anything based on human behavior will resist attempts at forecasting
Projections in the natural sciences have mainly been on a long upward trend towards greater accuracy. Weather forecasts are a shining example: The Storm Prediction Center has really been nailing their forecasts lately, in a way that would have been purely a dream half a century ago.
â– This has tended to give people the impression that anything that is quantifiable can be accurately projected. This confidence has been badly misapplied to the social sciences. Individual things can be well-known about topics within subjects like political science or economics, but a whole lot of macro-scale projections are still firmly within the grasp of fickle aspects of both individual psychology and group dynamics.
â– Anyone who makes confident, sweeping predictions about the economy should be viewed with overwhelming suspicion. There are far too many human-based variables involved for anyone to know with certainty how things will go.
â– Central to this is the knowledge that factors may line up in favor of a turn of events in one direction or another, but what we simply cannot know ahead of time are what timing and what triggers will be involved. This doesn't stop certain overconfident types from profiting by selling products like "market forecasts" -- but it should.
â– A sudden 10% downturn in the stock market has just resulted, ultimately, from the impulses of a single individual human being. There are those who saw the conditions coming together for what has happened, but nobody predicted outright what actually has come to pass. Humans remain the wildest of wild cards, and unless and until we perfect a great deal more of the psychological sciences, timing and triggers will remain the elusive aspects of every plausible economic forecast.
