Global Crisis / Innovation Blog

Hedgehogs vs. Foxes: Why Economic Experts Flunk Forecasting 101

By Shlomo Maital

  

 

 

 The Fox and the Hedgehog: Which are You?

The famed philosopher Isaiah Berlin once wrote an essay, “The Hedgehog and the Fox”, which quoted ancient Greek poet Archilochus: (“the fox knows many little things, but the hedgehog knows one big thing”).

   Turns out this explains why economists’ forecasts (and those of other experts) are so dreadful!

    Writing in Scientific American (March 2011), Michael Shermer cites a study by U. Cal (Berkeley) Professor Philip Tetlock, who examined 284 experts and 82,361 predictions about the future. “They did little better than a dart-throwing chimpanzee”, notes Tetlock.

   But why? 

   Cognitive style.  Foxes, who know a little about a great many things, did far better in prediction than hedgehogs, who know a lot about one area of expertise.

    Academic training, and doctoral research,  makes scholars highly specialized and narrow – pure hedgehogs.  Economists know about free markets.  They tend not to know about sociology, politics, psychology, history and other disciplines. Result: Narrow wrong forecasts that miss the complexity of economic systems. 

    Want to become a great forecaster?  Become a fox.  Develop your curiosity about everything.  And, at the same time, listen to forecasts of experts who you know are hedgehogs with wide interests.