I have opined at length about predictions within the financial market and how crap people are at making predictions and how they and everyone else dont seem to care about their lack of accuracy. Their is not the slightest hint of embarrassment among experts that they are continually wrong.
This nice little piece by Robin Hanson sheds some light on the problem.
The costs of creating and monitoring forecast accuracy might be higher than we expect if in general thinking about times other than the present is harder than we expect. Most animals seem to focus almost entirely on reacting to current stimuli, as opposed to remembering the past or anticipating the future. We humans are proud that we attend more to the past and future, but perhaps this is still harder than we let on, and we flatter ourselves by thinking we attend more than we do.
The benefits of creating and monitoring forecast accuracy might be lower than we expect if the function and role of forecasting is less important than we think, relative to the many functions and roles served by our pundits, academics, and managers.
Consider first the many possible functions and roles of media pundits. Media consumers can be educated and entertained by clever, witty, but accessible commentary, and can coordinate to signal that they are smart and well-read by quoting and discussing the words of the same few focal pundits. Also, impressive pundits with prestigious credentials and clear “philosophical” positions can let readers and viewers gain by affiliation with such impressiveness, credentials, and positions. Being easier to understand and classify helps “hedgehogs” to serve many of these functions.
