Quotes About Prediction

the illusion of valid prediction remains intact, a fact that is exploited by people whose business is prediction—not only financial experts but pundits in business and politics, too.

whenever the correlation between two scores is imperfect, there will be regression to the mean.

Indeed, we pay people quite well to provide interesting explanations of regression effects. A business commentator who correctly announces that "the business did better this year because it had done poorly last year" is likely to have a short tenure on the air.

Correcting your predictions may complicate your life

In a memorable example, Dawes showed that marital stability is well predicted by a formula: frequency of lovemaking minus frequency of quarrels You don't want your result to be a negative number.

In the competition with the inside view, the outside view doesn't stand a chance.

The widespread misunderstanding of randomness sometimes has significant consequences.

people rely on a limited number of heuristic principles which reduce the complex tasks of assessing probabilities and predicting values to simpler judgmental operations. In general, these heuristics are quite useful, but sometimes they lead to severe and systematic errors.

regression inevitably occurs when the correlation between two measures is less than perfect

We proposed that they used resemblance as a simplifying heuristic (roughly, a rule of thumb) to make a difficult judgment. The reliance on the heuristic caused predictable biases (systematic errors) in their predictions.

For example, if you believe that 3% of graduate students are enrolled in computer science (the base rate), and you also believe that the description of Tom W is 4 times more likely for a graduate student in that field than in other fields, then Bayes's rule says you must believe that the probability that Tom W is a computer scientist is now 11%. If the base rate had been 80%, the new degree of belief would be 94.1%.

Your inability to reconstruct past beliefs will inevitably cause you to underestimate the extent to which you were surprised by past events.

People are asked for a prediction but they substitute an evaluation of the evidence, without noticing that the question they answer is not the one they were asked. This process is guaranteed to generate predictions that are systematically biased; they completely ignore regression to the mean.

I never met Meehl, but he was one of my heroes from the time I read his Clinical vs. Statistical Prediction: A Theoretical Analysis and a Review of the Evidence.

planning fallacy

Both in explaining the past and in predicting the future, we focus on the causal role of skill and neglect the role of luck. We are therefore prone to an illusion of control.

Further experiments showed that people were driven to overstate the accuracy not only of their original predictions but also of those made by others.

The sense-making machinery of System 1 makes us see the world as more tidy, simple, predictable, and coherent than it really is. The illusion that one has understood the past feeds the further illusion that one can predict and control the future.

And it is natural for System 1 to generate overconfident judgments, because confidence, as we have seen, is determined by the coherence of the best story you can tell from the evidence at hand. Be warned: your intuitions will deliver predictions that are too extreme and you will be inclined to put far too much faith in them.

objective ignorance accumulates steadily the further you look into the future.

Despite all the evidence in favor of mechanical and algorithmic prediction methods, and despite the rational calculus that clearly shows the value of incremental improvements in predictive accuracy, many decision makers will reject decision-making approaches that deprive them of the ability to exercise their intuition.

There is essentially no evidence of situations in which people do very poorly and models do very well with the same information.

there is a large amount of objective ignorance in the prediction of human behavior.

The Illusions of Pundits The idea that the future is unpredictable is undermined every day by the ease with which the past is explained