The forecasting fallacy

Essay by Alex Murrell: “Marketers are prone to a prediction.

You’ll find them in the annual tirade of trend decks. In the PowerPoint projections of self-proclaimed prophets. In the feeds of forecasters and futurists. They crop up on every conference stage. They make their mark on every marketing magazine. And they work their way into every white paper.

To understand the extent of our forecasting fascination, I analysed the websites of three management consultancies looking for predictions with time frames ranging from 2025 to 2050. Whilst one prediction may be published multiple times, the size of the numbers still shocked me. Deloitte’s site makes 6904 predictions. McKinsey & Company make 4296. And Boston Consulting Group, 3679.

In total, these three companies’ websites include just shy of 15,000 predictions stretching out over the next 30 years.

But it doesn’t stop there.

My analysis finished in the year 2050 not because the predictions came to an end but because my enthusiasm did.

Search the sites and you’ll find forecasts stretching all the way to the year 2100. We’re still finding our feet in this century but some, it seems, already understand the next.

I believe the vast majority of these to be not forecasts but fantasies. Snake oil dressed up as science. Fiction masquerading as fact.

This article assesses how predictions have performed in five fields. It argues that poor projections have propagated throughout our society and proliferated throughout our industry. It argues that our fixation with forecasts is fundamentally flawed.

So instead of focussing on the future, let’s take a moment to look at the predictions of the past. Let’s see how our projections panned out….

Viewed through the lens of Tetlock, it becomes clear that the 15,000 predictions with which I began this article are not forecasts but fantasies.

The projections look precise. They sound scientific. But these forecasts are nothing more than delusions with decimal places. Snake oil dressed up as statistics. Fiction masquerading as fact. They provide a feeling of certainty but they deliver anything but.

In his 1998 book The Fortune Sellers, the business writer William A. Sherden quantified our consensual hallucination: 

“Each year the prediction industry showers us with $200 billion in (mostly erroneous) information. The forecasting track records for all types of experts are universally poor, whether we consider scientifically oriented professionals, such as economists, demographers, meteorologists, and seismologists, or psychic and astrological forecasters whose names are household words.” 

The comparison between professional predictors and fortune tellers is apt.

From tarot cards to tea leaves, palmistry to pyromancy, clear visions of cloudy futures have always been sold to susceptible audiences. 

Today, marketers are one such audience.

It’s time we opened our eyes….(More)”.