Will Tomorrow Be Just Like Today?

Tim Haab at Environmental Economics has a nice entry about the prediction business, as it relates to weather, but he really could be talking about any business that involves prediction.  First he quotes Gregg Easterbrook talking about football:

Now, for my off-price generic forecasts. First, I predict that every NFL team will end the 2006 season with the same record as it did in 2005. Obviously this won't be right, but will it be closer than the countless pseudo-scientific forecasts floating around? I bet if you analyzed the last, say, 20 years, endlessly predicting every team would finish with the same record as the previous season would do you better than actually thinking about your prediction.

And then he simply modifies it for weather:

Now, for my off-price generic forecasts. First, I predict that [the high temperature tomorrow will be the same as the high temperature yesterday]. Obviously this won't be right, but will it be closer than the countless pseudo-scientific forecasts floating around? I bet if you analyzed the last, say, 20 years, endlessly predicting [daily temperatures would be the same] as the previous [day] would do you better than actually thinking about your prediction.

That makes sense to us.  Even outside of the prediction business, people are inclined to subconciously assume that today (or tomorrow) will be just like the day before.  And that's what happened this year with respect to hurrican forecasts, even though last year, by all accounts was an abberation.  And even if people know consciously that the year before was unusual, there's still that nagging instinct that this year will be just like last.

And then we have Amaranth, which seemed to assume that at some point this summer, a big hurricane was bound to wreck the gulf and send gas soaring.  Would they have guessed this had it not been for Katrina last year?

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