Better Track Record
A significant body of academic research (see below) has concluded that consensus forecasts have a better track record than most of the individual forecasts which make up the consensus, because few, if any, individuals manage to consistently outperform the average. While in any one year some forecasting panellists will probably do better than the consensus in terms of predicting the correct outcome, these 'top performers' will vary from year to year and are very difficult to identify in advance. Consequently, using a consensus prediction from a group of expert forecasters can improve accuracy and enhance the work of our subscribers, who include investment managers, treasury executives, corporate planners, central bankers and government departments around the world.
Chart From: "The IMF and the OECD Versus Consensus Forecasts" (Reference below)
Academic Research on Averaging Forecasts and Forecast Accuracy:
Roy Batchelor (City University Business School), "The IMF and OECD versus Consensus Forecasts", August 2000 (see above radar graphs). Alternatively, contact: Ms. Claire Abdul-Obitayo, City University Business School, Frobisher Crescent, Barbican Centre, London EC2Y 8HB, United Kingdom. Tel: (44) 20 7477 8733 Fax: (44) 20 7477 8881
Marten Blix, Joachim Wadefjord, Ulrika Wienecke and Martin Adahl (Swedish Central Bank), "How Good is the Forecasting Performance of Major Institutions?", Economic Review of the Swedish Central Bank, Autumn 2001. The complete study is available as a PDF download at www.riksbank.com under Press and Published - Articles - Economic Review 2001:3.
Stephen K. McNees (Federal Reserve Bank of Boston), "Consensus Forecasts: Tyranny of the Majority", New England Economic Review, November 1987.
Victor Zarnowitz (University of Chicago and National Bureau of Economic Research), "The Accuracy of Individual and Group Forecasts from Business Outlook Surveys", Journal of Forecasting, January 1984.