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

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