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Forecasting the U.K. economy
novel. However, it is here, in what becomes the complexities of multivariate analysis, that the authors start to get lost. Within theii chosen life cycle framework the authors make use of a complicated view of the marketing function in the 5x1~ They implicitly thhrk of fomcastlng brand sales as a process of clusterhrg heterogeneous potential consumers into homogeneous subsets, of positioning the brand (or projected brand) with regard to its competitors and its consumers, and modehing the development of both the product and the market. While 1 believe the aDDroach is fundamentally correct, unfortunately there has -been no published work which has convincingly reported the successful adoption of this approach. Micro-analytic simulation models are as yet not good forecssting models. New product models based on psnel data are even worse and the authors offer us no means of evaluating the various approaches they describe. Does formalizing the decision maker’s view of a product and its competitors produce better decisions7 How good are we at forecasting social trends and is it not as reasonable an approach to use a naive model? I for one would like to see some hard evidence on both the theoretical validity and the cost etfectiveness of the level of complexity the authors regard as appropriate. (For a thorough discussion of the bene5.s of accepthig the complications of Box Jenkins, see for example articks by Chaffield and Prothero, and Box and Jenkins in J. Roy. &&.rr. tic., series A, vol. 136 (1973) as well as Newbold and Granaer &c. cit. vol. 137 (1974). Even these art&s accept statis&al criteria too casually.).
future
The latter part of the book expands on the description of various forecasting techniques. The executive or the planner,
widening hi knowledge of the subject, would I think tind many of the descriptions either mysterious (a paragraph on spectral density analysis plus an advanced reference) or unneassarily verbose (Census X-II). Thus he would miss many of the useful insights the authors offer into techniques such as regression which are cheap, quite accurate, and may be applied by an operator equipped with a basic course in economics and forecasting who has access to a suite of computer programmes. Ifthatsamepersonalsohasathis dispoml a few alternative naive forecasting models he is likely to produa a forecast as useful as many a more sophisticated specialist. Gverall, I would argue that the authors have failed to guide the planner and the executive much further along the path opened up by their original article. We have too quickly become lost in the wide variety of techniques available and the numerous situations in which they may be applied. What ls needed is a means of evaluating one’s own firm’s forecsstlng etfort and a method to improve it if appropriate. The specialist on the other hand requires a survey of the techniques, their strengths and weaknesses and the appropriate technical references. This book vacillates between these two goals and meets neither. R. A. FILD~S Manchester Business school
Feremst@ the U.K. Economy, by J. C. K. ASH and D. J. Shfrrns, Saxon House/D.C. Heath, Famborough (1974), 267 pp. a.50 (hardback). This book attempts to evaluate the various forecasts that are made of the U.K. economy. The basic method of analvsis is to calculate the Thell inequ&ty coe5cient, V, for eachset of forecasts annually, half-yearly and quarterly and to compare the results with naive methods of extrapolation. In the case of perfect forecasting U equals 0 whilst if a fore caster predicts no change throughout then U equals 1; there is no limit of course, as forecasts can clearly be inferior to simply saying ‘no change’ each time. The measure can also be used to investigate if there is any bias in the forecasts and whether there are any systematic errors. A further calculation is the proportion of turning points that are missed and the number forecast that did not take place.
APRIL, 1975
The analysis is first applied to the anmral forecssts of Treasury for the period 1951-1971 and the National Institute of Economic and Social Research for the years 1963-1971. This is followed by an analysis of the forecasts for the fourth quarter of the year under review and then a detailed analysis of the NIESR quarterly forecasts. The annual analysis concentrated upon the values of the Gross Domestic Product and its components whilst the quarterly analysis also includes a review of the results for personal income, prices and the balance of payments. Following chapters then compare half yearly forecasts for the period 1968-1971 made by the Treasury, NIESR, London Business School and the Sunday Telegraph and ultimately they are compared with forecasts made of other countries. The presentation of the results is entirely statistical with very little commentary other than describing the contents of the 95 tables although there is no table of the forecasts and the actual results. One receives the distinct impression that every conceivable calculation that could be made with the limited numbcT of forecasts has been made. The result is that it is a very technical book and little of it is likely to be of interest to the general reader or planner other than for a cursory glance at the excellent summan ‘esattheendofeach chapter. The main conclusion is that forecaster’s pmdictions are significantly more accurate than simply extrapolating or averaging past outcomes. Different forecasters perform very d5emntly with respect to ditTerent variables such that no single forecast comes out clearly ahead. Furthermore there is little evidence that the quality of the forecasts has improved with time. What we do not gain from this book is any feeling of why forecasts go wrong, what have been the main problems the forecasters have found and how forecasting practice has altered in the face of the changing world. T. BURNT London Graduate School of Business Studies
Ewope2ooo:Project1,EdMatingMMfortbe21stcentmyVolume 6. A Ualverslty of the Futme, 196 pp. (30 D.fl.).
Volume 7. Pempectlves in Prhnary Education, 250 pp. (38.50 D.fl.). Both softbacks, Martinius Nijhoff, The Hague. English editions 1972-3. Any discussion of the future of the university sounds like science fiction since unlverslties generate knowledge and the knowledge explosion is eliciting new methods of computer storage and information retrieval. Some people talk of a tenfold increase every three years between now and the year 2000 in computer calculating and memory capacity. Moreover, when coupled to teaching machines and operating cassettes more sophisticated pro5es of students may well be forthcoming. Indeed, one may well anticipate a panversity with complete freedom to tap in at the source. The university as ediice may well be replaced by the panversity as system. These and other ideas spring from Volume 6 of Project 1: a conjectural scenario based on mass higher education. certainly the imagination boggles at an average of 15 to 20 thousand students per institution by the year 2000. As Gabriel Fragni&e says in an imaginative contribution, ‘European higher education systems in the year 2000 will be regional federations of autonomous institutions, both academic and non-academic*. Finance, as Dieter Berstecher and Ignace Hecquet say, will be critical: the English Open University costs only 8502 per student as opposed to El010 in the traditional universities. Inevitably, of course, new methods of assessment will accompany the new concepts for as Jean Lad&e, Jacques Drexe, Jean Jadot and Nicolas Rouche remark, ‘The university must no longer be conceived of as a milieu in which individuals are initiated into tixed disciplines, but as a milieu in which they 6nd the material and human means
101
future
The latter part of the book expands on the description of various forecasting techniques. The executive or the planner,
widening hi knowledge of the subject, would I think tind many of the descriptions either mysterious (a paragraph on spectral density analysis plus an advanced reference) or unneassarily verbose (Census X-II). Thus he would miss many of the useful insights the authors offer into techniques such as regression which are cheap, quite accurate, and may be applied by an operator equipped with a basic course in economics and forecasting who has access to a suite of computer programmes. Ifthatsamepersonalsohasathis dispoml a few alternative naive forecasting models he is likely to produa a forecast as useful as many a more sophisticated specialist. Gverall, I would argue that the authors have failed to guide the planner and the executive much further along the path opened up by their original article. We have too quickly become lost in the wide variety of techniques available and the numerous situations in which they may be applied. What ls needed is a means of evaluating one’s own firm’s forecsstlng etfort and a method to improve it if appropriate. The specialist on the other hand requires a survey of the techniques, their strengths and weaknesses and the appropriate technical references. This book vacillates between these two goals and meets neither. R. A. FILD~S Manchester Business school
Feremst@ the U.K. Economy, by J. C. K. ASH and D. J. Shfrrns, Saxon House/D.C. Heath, Famborough (1974), 267 pp. a.50 (hardback). This book attempts to evaluate the various forecasts that are made of the U.K. economy. The basic method of analvsis is to calculate the Thell inequ&ty coe5cient, V, for eachset of forecasts annually, half-yearly and quarterly and to compare the results with naive methods of extrapolation. In the case of perfect forecasting U equals 0 whilst if a fore caster predicts no change throughout then U equals 1; there is no limit of course, as forecasts can clearly be inferior to simply saying ‘no change’ each time. The measure can also be used to investigate if there is any bias in the forecasts and whether there are any systematic errors. A further calculation is the proportion of turning points that are missed and the number forecast that did not take place.
APRIL, 1975
The analysis is first applied to the anmral forecssts of Treasury for the period 1951-1971 and the National Institute of Economic and Social Research for the years 1963-1971. This is followed by an analysis of the forecasts for the fourth quarter of the year under review and then a detailed analysis of the NIESR quarterly forecasts. The annual analysis concentrated upon the values of the Gross Domestic Product and its components whilst the quarterly analysis also includes a review of the results for personal income, prices and the balance of payments. Following chapters then compare half yearly forecasts for the period 1968-1971 made by the Treasury, NIESR, London Business School and the Sunday Telegraph and ultimately they are compared with forecasts made of other countries. The presentation of the results is entirely statistical with very little commentary other than describing the contents of the 95 tables although there is no table of the forecasts and the actual results. One receives the distinct impression that every conceivable calculation that could be made with the limited numbcT of forecasts has been made. The result is that it is a very technical book and little of it is likely to be of interest to the general reader or planner other than for a cursory glance at the excellent summan ‘esattheendofeach chapter. The main conclusion is that forecaster’s pmdictions are significantly more accurate than simply extrapolating or averaging past outcomes. Different forecasters perform very d5emntly with respect to ditTerent variables such that no single forecast comes out clearly ahead. Furthermore there is little evidence that the quality of the forecasts has improved with time. What we do not gain from this book is any feeling of why forecasts go wrong, what have been the main problems the forecasters have found and how forecasting practice has altered in the face of the changing world. T. BURNT London Graduate School of Business Studies
Ewope2ooo:Project1,EdMatingMMfortbe21stcentmyVolume 6. A Ualverslty of the Futme, 196 pp. (30 D.fl.).
Volume 7. Pempectlves in Prhnary Education, 250 pp. (38.50 D.fl.). Both softbacks, Martinius Nijhoff, The Hague. English editions 1972-3. Any discussion of the future of the university sounds like science fiction since unlverslties generate knowledge and the knowledge explosion is eliciting new methods of computer storage and information retrieval. Some people talk of a tenfold increase every three years between now and the year 2000 in computer calculating and memory capacity. Moreover, when coupled to teaching machines and operating cassettes more sophisticated pro5es of students may well be forthcoming. Indeed, one may well anticipate a panversity with complete freedom to tap in at the source. The university as ediice may well be replaced by the panversity as system. These and other ideas spring from Volume 6 of Project 1: a conjectural scenario based on mass higher education. certainly the imagination boggles at an average of 15 to 20 thousand students per institution by the year 2000. As Gabriel Fragni&e says in an imaginative contribution, ‘European higher education systems in the year 2000 will be regional federations of autonomous institutions, both academic and non-academic*. Finance, as Dieter Berstecher and Ignace Hecquet say, will be critical: the English Open University costs only 8502 per student as opposed to El010 in the traditional universities. Inevitably, of course, new methods of assessment will accompany the new concepts for as Jean Lad&e, Jacques Drexe, Jean Jadot and Nicolas Rouche remark, ‘The university must no longer be conceived of as a milieu in which individuals are initiated into tixed disciplines, but as a milieu in which they 6nd the material and human means
101