A significant body of academic and central bank research (see below) has concluded that group forecasts and, specifically, Consensus Forecasts™ have a better track record than most of the individual forecasts which make up the group, because few, if any, individuals manage to consistently outperform the average. While in any one year some forecasting panellists will probably do better than our Consensus Forecasts™ in terms of predicting the correct outcome, these ‘top performers’ will vary from year to year and are very difficult to identify in advance. Consequently, using Consensus Forecasts™ which are surveyed from a group of expert economists can improve accuracy and enhance the work of our subscribers, who include investment managers, treasury executives, corporate planners, central bankers and government departments around the world.
Chart From: “The IMF and the OECD Versus Consensus Forecasts” (Reference below)
Academic Research on Combining Forecasts and Forecast Accuracy Using Consensus Forecasts:
Roy Batchelor (City University Business School), “The IMF and OECD versus Consensus Forecasts”, August 2000 (see above radar graphs). Applied Economics, 33(2), p.225-235; [Peer Reviewed]. Click here to download a PDF copy of the study.
Marten Blix, Joachim Wadefjord, Ulrika Wienecke and Martin Adahl (Swedish Central Bank), “How Good is the Forecasting Performance of Major Institutions?”, Economic Review of the Swedish Central Bank, Autumn 2001. The complete study is available as a PDF download at the Riksbank website.
Filip Novotný and Marie Raková (both Czech National Bank), “Assessment of Consensus Forecasts Accuracy: The Czech National Bank Perspective“, Working Paper Series 14, December 2010.
Scott J. Armstrong, “Combining Forecasts”, Chapter 13, Principles of Forecasting: A Handbook for Researchers and Practitioners, The Wharton School, University of Pennsylvania, P.417- 439, 2001.
Robert C. Jones, “Making Better Investment Decisions”, The Journal of Portfolio Management, Volume 40 No 2, P.128- 143, Winter 2014.
“At least since the publication of “The Combination of Forecasts” (Bates and Granger ), economists have known that combining forecasts from different sources can both improve accuracy and reduce forecaster error. In the intervening years, numerous studies have confirmed these conclusions, outlined conditions under which forecast combinations are most effective, and tried to explain why simple equal weights work so well relative to more sophisticated statistical techniques.”