Escaping the Reality Test

Abstract

Economic crises regularly give rise to criticisms of economists and forecasters for having failed to blow the whistle. Forecasters’ efforts to deal with ‘errors’ and events that contradict their predictions show analogies between forecasting and magic as analysed by Henri Hubert and Marcel Mauss in the early twentieth century. The way forecasters depict the process of forecast production pinpoints three different sets of explanations for errors that together seek to discard ‘reality’ (‘what actually happened’) as a relevant criterion for judging forecasts (‘what had been predicted’). Forecasters argue that the ontological indeterminacy of economies and the presence of unanticipated shocks absolve them from blame; they emphasize the value of identifying causal narratives and scenarios even when point forecasts are wrong; and they stress the importance of adhering to professional methods or rituals.