Golden Rule of Forecasting Rearticulated: Forecast Unto Others as You Would Have Them Forecast Unto You

9 Pages Posted: 15 Aug 2015

See all articles by Kesten C. Green

Kesten C. Green

University of South Australia - UniSA Business School; Ehrenberg-Bass Institute for Marketing Science

J. Scott Armstrong

University of Pennsylvania - Marketing Department

Andreas Graefe

Macromedia University of Applied Sciences

Date Written: April 2, 2015

Abstract

The Golden Rule of Forecasting is a general rule that applies to all forecasting problems. The Rule was developed using logic and was tested against evidence from previously published comparison studies. The evidence suggests that a single violation of the Golden Rule is likely to increase forecast error by 44 percent. Some commentators argue that the Rule is not generally applicable, but do not challenge the logic or evidence provided. While further research might provide useful findings, available evidence justifies adopting the Rule now. People with no prior training in forecasting can obtain the substantial benefits of following the Golden Rule by using the Checklist to identify biased and unscientific forecasts at little cost.

Keywords: cost benefit analysis, index method, legal damage claims, precautionary principle, principal components, take-the-best

JEL Classification: C53

Suggested Citation

Green, Kesten C. and Armstrong, J. Scott and Graefe, Andreas, Golden Rule of Forecasting Rearticulated: Forecast Unto Others as You Would Have Them Forecast Unto You (April 2, 2015). Available at SSRN: https://ssrn.com/abstract=2644005 or http://dx.doi.org/10.2139/ssrn.2644005

Kesten C. Green (Contact Author)

University of South Australia - UniSA Business School ( email )

GPO Box 2471
Adelaide, SA 5001
Australia
+61 8 83012 9097 (Phone)

HOME PAGE: http://people.unisa.edu.au/Kesten.Green

Ehrenberg-Bass Institute for Marketing Science ( email )

Australia

HOME PAGE: http://www.marketingscience.info/people/KestenGreen.html

J. Scott Armstrong

University of Pennsylvania - Marketing Department ( email )

700 Jon M. Huntsman Hall
3730 Walnut Street
Philadelphia, PA 19104-6340
United States
215-898-5087 (Phone)
215-898-2534 (Fax)

HOME PAGE: http://marketing.wharton.upenn.edu/people/faculty/armstrong.cfm

Andreas Graefe

Macromedia University of Applied Sciences ( email )

Sandstrasse 9
Munich, Bavaria 80337
Germany

HOME PAGE: http://www.andreas-graefe.org

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