The Calculus of Dissent: Bias and Diversity in FOMC Projections

44 Pages Posted: 11 Feb 2022

See all articles by Thomas L. Hogan

Thomas L. Hogan

American Institute for Economic Research

Date Written: December 3, 2021


Economic projections by the Federal Open Market Committee (FOMC) were highly inaccurate in the years during and after the Great Recession. Using a model of collective prediction that weighs the ``wisdom of crowds'' against shared biases, we analyze GDP forecast errors in a panel dataset of FOMC projections from 1992 through 2016. Consistent with the model, we find that diversity of projections reduces collective error while shared bias increases collective error. Collective error is strongly associated with errors by the Federal Reserve Board staff. The benefits of diversity are often statistically significant, especially for projections with terms longer than one year.

Keywords: Federal Reserve, Forecasting, Committee decisions, Wisdom of crowds

JEL Classification: D71, D73, E37, E47, E58

Suggested Citation

Hogan, Thomas L., The Calculus of Dissent: Bias and Diversity in FOMC Projections (December 3, 2021). AIER Sound Money Project Working Paper No. 2022-01, Available at SSRN: or

Thomas L. Hogan (Contact Author)

American Institute for Economic Research ( email )

PO Box 1000
Great Barrington, MA 01230
United States

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Abstract Views
PlumX Metrics