Controversy: Grading the Forecasters
IF YOU conduct a race in which one contestant is positioned at the starting line and the rest are half way down the track, it is not surprising who finishes last. That is what Charles Wolf, Jr. did in his article, “Scoring the Economic Forecasters” (The Public Interest, Summer 1987). For two of the four years, 1984 and 1986, Dr. Wolf used OMB (really Administration) forecasts made in January of the prior year; for everyone else, he used forecasts made in January of the year forecasted, fully twelve months after we made ours. When we correct for this, OMB’s rank out of the fifteen forecasts jumps from fourteenth place in 1984 to second place, and from fifteenth in 1986 to ninth. In the composite score for 1983-86, OMB rises from fifteenth place to eleventh.