Article ID: | iaor2006519 |
Country: | Netherlands |
Volume: | 21 |
Issue: | 3 |
Start Page Number: | 551 |
End Page Number: | 564 |
Publication Date: | Jul 2005 |
Journal: | International Journal of Forecasting |
Authors: | Goddard John, Forrest David, Simmons Robert |
Keywords: | forecasting: applications, gaming |
Sets of odds issued by bookmakers may be interpreted as incorporating implicit probabilistic forecasts of sporting events. Employing a sample of nearly 10000 English football (soccer) games, we compare the effectiveness of forecasts based on published odds and forecasts made using a benchmark statistical model incorporating a large number of quantifiable variables relevant to match outcomes. The experts' views, represented by the published odds, are shown to be increasingly effective over a 5-year period. Bootstraps performed on the statistical model fail to outperform the expert judges. The trend towards odds-setters displaying greater expertise as forecasters coincided with a period during which intensifying competition is likely to have increased the financial penalties for bookmakers of imprecise odds-setting. In the context of a financially pressured environment, the main findings of this paper challenge the consensus that subjective forecasting by experts will normally be inferior to forecasts from statistical models.