A Comparative Study of Methods for Long-Range Market Forecasting

The following hypotheses about long-range market forecasting were examined: H 1 Objective methods provide more accuracy than do subjective methods. H 2 The relative advantage of objective over subjective methods increases as the amount of change in the environment increases. H 3 Causal methods provide more accuracy than do naïve methods. H 4 The relative advantage of causal over naïve methods increases as the amount of change in the environment increases. Support for these hypotheses was then obtained from the literature and from a study of a single market. The study used three different models to make ex ante forecasts of the U.S. air travel market from 1963 through 1968. These hypotheses imply that econometric methods are more accurate for long-range market forecasting than are the major alternatives, expert judgment and extrapolation, and that the relative superiority of econometric methods increases as the time span of the forecast increases.