NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Comparing the Point Predictions and Subjective Probability Distributions of Professional Forecasters

Joseph Engelberg, Charles F. Manski, Jared Williams

NBER Working Paper No. 11978
Issued in January 2006
NBER Program(s):   EFG

We use data from the Survey of Professional Forecasters to compare point forecasts of GDP growth and inflation with the subjective probability distributions held by forecasters. We find that SPF forecasters summarize their underlying distributions in different ways and that their summaries tend to be favorable relative to the central tendency of the underlying distributions. We also find that those forecasters who report favorable point estimates in the current survey tend to do so in subsequent surveys. These findings, plus the inescapable fact that point forecasts reveal nothing about the uncertainty that forecasters feel, suggest that the SPF and similar surveys should not ask for point forecasts. It seems more reasonable to elicit probabilistic expectations and derive measures of central tendency and uncertainty, as we do here.

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Document Object Identifier (DOI): 10.3386/w11978

Published: Engelberg, Joseph, Charles F. Manski and “Comparing the Point Predictions and Subjective Probability Distributions of Professional Forecasters." Journal of Business and Economic Statistics 165 (2009): 146-158.

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