To Read: Walter Friedman, Fortune Tellers: The Story of America’s First Economic Forecasters

This book is going on my to-read pile. It’s not a topic I know much about, but it seems very interesting. Read the rest of the interview on the Harvard Business Review blog here.

Is there a risk that you get overconfident because of that? One of the things that happened in the ‘20s is that things kept going so well, and the forecasters who predicted a continued boom were right again and again. If you get very confident that government knows what it’s doing and can manage the economy well, does that increase risk at all?

I think the real danger is believing that any forecaster really knows what he or she is doing. One of the problems that people have with forecasting is that they tend to look at past accuracy as an indication whether or not to follow a forecaster, when in fact past accuracy is much more often based on luck, and what you really have to do is try to figure out what these forecasters are thinking about, what their reasons are, and then you can decide whether you want to follow one or another. If you just blindly look as to whether they got it right or wrong, then you’re probably going to fall for a guru one of these days.

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