Modelling and forecasting reliability

Four (counter) examples are used to establish the proposition that good forecasting requires a meaningful and proper model, particularly when forecasting into situations that differ greatly from those that characterize the data upon which the model estimates are based. It is also argued that, contrary to much current opinion, it is this latter activity that is the real art of forecasting. The central notion of a ’meaningful and proper’ model is defined, and the process leading to its construction is examined.