St James's Park, London, 11th September 2013
Walking through St James's Park this afternoon brings back memories of the forecasting consultancy I started there in the 1990s. Naturally, I was often asked how well we can predict the future. The answer is sometimes we can. If we know enough about what's driving a system, we can predict it. Sometimes we don't know enough; sometimes we don't know it accurately enough, and our predictions veer wildly off-course; but other times we can predict well, give or take.
For example: How much will stock markets go up or down today? There are so many things that can have an effect, many of them out-of-the-blue and one-off, that we are hopelessly unable to say. Technical analysts believe they can succeed by looking at past performance, but ask them to predict what will happen today and they will do no better than tossing a coin. Curiously, if you try to predict where the stock markets will be on a longer timescale, say thirty years, you can do a reasonable job.
Another example: Will it rain in London? Although we can understand a lot about what drives weather systems, we don’t know the current conditions accurately enough to predict more than a few hours ahead. After that, the predictions go off course. So I can tell you enough to decide what to wear today, but not to decide when to come here on holiday.
It’s an odd human quirk that people place too much trust in forecasts, even when they should know better. A businessman or a politician often has an insatiable desire for a number – any number, however flawed – to help make today’s decisions, without a care for how accurate the prediction is likely to be, and how to deal with that doubt. Thankfully, for forecasters, there’s another odd human quirk: people hardly ever look back at how good previous forecasts were. They just want the next one.
Some things can be predicted far ahead with confidence. In 150 million years, Australia will crash into Russia. In 6 billion years, a parched earth, having long since rid itself of us troublesome fleas, will itself be consumed by a bloated sun. You have been warned.