Prediction is a big, big business these days, and even those of us who aren’t explicitly in the prediction business probably do all we can to make sense of the future. Does your company do marketing research? Do you track the financial pages? Do you keep abreast of the latest innovations in your industry (or any industry, for that matter)? If so – and most of you probably answered yes to at least one of these questions – then that’s all part of what I’m calling the prediction business. In a nutshell, the more we know about the future, the more likely we are to make decisions that succeed in the present and the future, and we all want that.
So, how good are we at predicting? How much of what we think we know is accurate, and how reliable are our techniques for predicting? Perhaps not as good as we’d hope. Consider a recent BBC story on efforts to detect terrorists. It starts out with a promising premise: what if you had a method that was 90% effective? Not bad, right? But then the analysis takes a nasty left turn. Continue reading