Søren Kierkegaard, a 19th-century philosopher, put his finger on the nub of the problem facing economic forecasters and planners: “Life can only be understood backwards; but it must be lived forwards.” Working in a rapidly changing field based on imperfect knowledge of the present, economic analysts often are overly optimistic in their projections, and those inaccuracies can lead policy makers astray. getAbstract recommends this thoughtful, practical study of why economic forecasts tend toward the upside and how this error can undermine carefully made policies.
In this summary, you will learn
- Why optimism bias affects economic forecasts,
- How overly positive projections can have serious consequences and
- How economic planners can adjust overstated estimates to align more closely with real outcomes.
About the Authors
Giang Ho is an economist at the International Monetary Fund. Paolo Mauro is a senior fellow at the Peterson Institute for International Economics.