TY - JOUR AU - Zarnowitz,Victor AU - Lambros,Louis A. TI - Consensus and Uncertainty in Economic Prediction JF - National Bureau of Economic Research Working Paper Series VL - No. 1171 PY - 1987 Y2 - December 1987 UR - http://www.nber.org/papers/w1171 L1 - http://www.nber.org/papers/w1171.pdf N1 - Author contact info: Victor Zarnowitz Conference Board 845 3rd Avenue New York, NY 10022-6679 Tel: 212/339-0432 Fax: 212/836-9757 E-Mail: no email available M1 - published as Victor Zarnowitz. "Consensus and Uncertainty in Economic Prediction," in "Business Cycles: Theory, History, Indicators, and Forecasting" University of Chicago Press (1992) AB - The usual practice in economic forecasting is to report point predictions without specifying the attached probabilities. Periodic surveys of such forecasts produce group averages, which are taken to indicate the "consensus" of experts. Measures of the dispersion of individual forecasts around these averages are interpreted as indicating "uncertainty." However, consensus is best defined as the degree of agreement among the corresponding point predictions reported by different forecasters, while uncertainty is properly understood as referring to the diffuseness of the distributions of probabilities that individual forecasters attach to the different possible values of an economic variable. The NBER-ASA quarterly economic outlook surveys provide unique informationon probabilistic forecast distributions reported by a large number of individuals for changes in GNP and the implicit price deflator in 1969-81. These data permit comparisons of related point and probability forecasts from the same sources.The matched mean point forecasts and mean probability forecasts are found to agree closely. Standard deviations of point forecasts are generally smaller than the mean standard deviations of the predictive probability distributions for the same targets. Thus the former tend to understate uncertainty as measured by the latter. This is so particularly for short horizons. ER -