In his latest column for Bloomberg View, University of Rochester economics professor Narayana Kocherlakota explains the limitations of statistical forecasting, especially in relation to the recent U.S. election. “Statisticians use available information to help us make better decisions when we can’t be sure what will happen in the future,” he writes, before illustrating with a football analogy.
In other words, polls function as guides to decision-making, not as a means to predict the future with certainty. Calculated probabilities based on data can be combined with an assessment of the current situation in order to make informed choices.
Hillary Clinton’s decision not to campaign personally in Wisconsin might have been a mistake in retrospect. But, Kocherlakota cautions, “we’ll never know whether it was wrong given the information that the pollster and Clinton had at the time.”
Kocherlakota is the Lionel W. McKenzie Professor of Economics at Rochester and was president of the Federal Reserve Bank of Minneapolis.
Read the full article at Bloomberg View.
