Quantifying survey expectations: What’s wrong with the probability approach?

Quantifying survey expectations: What’s wrong with the probability approach?

0.00 Avg rating0 Votes
Article ID: iaor20128553
Volume: 29
Issue: 1
Start Page Number: 142
End Page Number: 154
Publication Date: Jan 2013
Journal: International Journal of Forecasting
Authors: ,
Keywords: performance evaluation, stock market, survey data
Abstract:

We study a matched sample of individual stock market forecasts consisting of both qualitative and quantitative forecasts. This allows us to test for the quality of forecast quantification methods by comparing quantified qualitative forecasts with actual quantitative forecasts. Focusing mainly on the widely used quantification framework advocated by Carlson and Parkin (1975), the so‐called ‘probability approach’, we find that quantified expectations derived from the probability approach display a surprisingly weak correlation with the reported quantitative stock return forecasts. We trace the reason for this low correlation to the importance of asymmetric and time‐varying thresholds, while individual heterogeneity across forecasters seems to play only a minor role. Hence, our results suggest that qualitative survey data may not be a very useful device for obtaining quantitative forecasts, and we suggest ways to remedy this problem when designing qualitative surveys.

Reviews

Required fields are marked *. Your email address will not be published.