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Is a Group of Economists Better than One? Than None?

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  • Graham, John R

Abstract

Can economists forecast the direction of economic growth? Casual observation indicates that individual economists make poor predictions of economic growth and that their forecasts are highly correlated. This article discusses the loss of information resulting from correlation and develops a method of combining forecasts that are cross-sectionally correlated. This approach greatly increases the accuracy of near-term forecasts of the direction of economic growth, although the individual with the best historical performance is better over longer horizons. Overall, when the data are properly aggregated, economists predict the direction of near-term economic growth and call turning points reasonably well. Copyright 1996 by University of Chicago Press.

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  • Graham, John R, 1996. "Is a Group of Economists Better than One? Than None?," The Journal of Business, University of Chicago Press, vol. 69(2), pages 193-232, April.
    • Handle: RePEc:ucp:jnlbus:v:69:y:1996:i:2:p:193-232
    DOI: 10.1086/209688
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    Citations

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    Cited by:

    1. Fildes, Robert & Stekler, Herman, 2002. "The state of macroeconomic forecasting," Journal of Macroeconomics, Elsevier, vol. 24(4), pages 435-468, December.
    2. Chua, Chew Lian & Tsiaplias, Sarantis, 2011. "Predicting economic contractions and expansions with the aid of professional forecasts," International Journal of Forecasting, Elsevier, vol. 27(2), pages 438-451.
    3. Jose, Victor Richmond R. & Winkler, Robert L., 2008. "Simple robust averages of forecasts: Some empirical results," International Journal of Forecasting, Elsevier, vol. 24(1), pages 163-169.
    4. Fifić, Mario & Gigerenzer, Gerd, 2014. "Are two interviewers better than one?," Journal of Business Research, Elsevier, vol. 67(8), pages 1771-1779.
    5. Lahiri, Kajal & Wang, J. George, 2013. "Evaluating probability forecasts for GDP declines using alternative methodologies," International Journal of Forecasting, Elsevier, vol. 29(1), pages 175-190.
    6. Lahiri, Kajal & Yang, Liu, 2013. "Forecasting Binary Outcomes," Handbook of Economic Forecasting, in: G. Elliott & C. Granger & A. Timmermann (ed.), Handbook of Economic Forecasting, edition 1, volume 2, chapter 0, pages 1025-1106, Elsevier.
    7. Grant, Andrew & Johnstone, David, 2010. "Finding profitable forecast combinations using probability scoring rules," International Journal of Forecasting, Elsevier, vol. 26(3), pages 498-510, July.
    8. Lahiri Kajal & Yang Liu, 2016. "A non-linear forecast combination procedure for binary outcomes," Studies in Nonlinear Dynamics & Econometrics, De Gruyter, vol. 20(4), pages 421-440, September.
    9. Wang, Xiaoqian & Hyndman, Rob J. & Li, Feng & Kang, Yanfei, 2023. "Forecast combinations: An over 50-year review," International Journal of Forecasting, Elsevier, vol. 39(4), pages 1518-1547.
    10. Yaniv, Ilan & Kleinberger, Eli, 2000. "Advice Taking in Decision Making: Egocentric Discounting and Reputation Formation," Organizational Behavior and Human Decision Processes, Elsevier, vol. 83(2), pages 260-281, November.

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