From a 2009 CNN interview with this blog’s inspiration, Philip Tetlock:
How do you know whether a talking head is a fox or a hedgehog?
Count how often they press the brakes on trains of thought. Foxes often qualify their arguments with “however” and “perhaps,” while hedgehogs build up momentum with “moreover” and “all the more so.” Foxes are not as entertaining as hedgehogs. But enduring a little tedium is worth it if you want realistic odds on possible futures.
Hear that CNN? People with too much confidence in their opinion are usually wrong. 2009 CNN needs to have a word with Friday’s CNN, “Influential economist: A new recession seems inevitable”:
“Now that we have several months of definitive hard data, this is not a forecast,” he said, pointing to key measures that don’t receive as much attention from the public or many economists.
I don’t know much about economic forecasting, but whenever an expert tells me that their prediction is not really a prediction, but an inevitability, I check my wallet – I’m probably getting my pocket picked. I don’t know nearly enough about economics to know whether or not there will be a double dip recession in the next year or not. I do know enough about PEOPLE to know that if there is another recession, it’ll be dumb luck that this guy saw it coming.
This article is a master class in thinking like a hedgehog and getting this economist’s name in the papers. After the jump, I’ll flag all the quotes from the article that should sound alarm bells in your head whenver you hear them:
The same economist made a forecast in September:
“[A recession has] either just begun, or it’s right in front of us,” said Lakshman Achuthan, the managing director of ECRI. “But at this point that’s a detail. The critical news is there’s no turning back. We are going to have a new recession.”
His certainty would have been a red flag in September. What’s even more of a red flag is an expert that, confronted with conflicting evidence, doubles down:
A new recession is inevitable, despite improvement in high-profile economic indicators, such as job creation and unemployment, and a stock market rally.
According to the article:
ECRI is one of the more widely respected firms on economic recessions, as it has never been wrong when forecasting that a recession would start, or failed to predict a recession well before it was widely accepted…..
But more than 50 years of economic data followed by his firm has shown him that when underlying growth slows to this degree, a recession always follows.
Something tells me that the source of that data on the ECRI is, in fact, the ECRI. The article would have you believe that a) the ECRI has been following data for 50 years and b) they’ve never missed a prediction. So, logically, they must have gotten every recession right for 50 years, which would be incredible, if it were true. The wording is very careful – they have “50 years of data” – the institute was started in 1996, which means there have only been two recessions to predict.
In September, a recession was either “already here, or imminent.” Now, the recession is “coming, DESPITE the recent economic data.” Something tells me that six months from now, if the recession hasn’t come yet, it will STILL be imminent (and so on, and so forth). Then, ten years from now, whenever another recession comes, they can cherry pick the time they were right, and say “I told you so!”