Valuing predictability - Grantham Research Institute on climate change and the environment<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.lse.ac.uk\/granthaminstitute\/publication\/valuing-predictability\/\" \/>\n<meta property=\"og:locale\" content=\"en_GB\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Valuing predictability - Grantham Research Institute on climate change and the environment\" \/>\n<meta property=\"og:description\" content=\"The authors of this paper study the question of how important it is to predict the distant future.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.lse.ac.uk\/granthaminstitute\/publication\/valuing-predictability\/\" \/>\n<meta property=\"og:site_name\" content=\"Grantham Research Institute on climate change and the environment\" \/>\n<meta property=\"article:modified_time\" content=\"2024-09-18T16:24:13+00:00\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Estimated reading time\" \/>\n\t<meta name=\"twitter:data1\" content=\"1 minute\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\\\/\\\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\\\/\\\/www.lse.ac.uk\\\/granthaminstitute\\\/publication\\\/valuing-predictability\\\/\",\"url\":\"https:\\\/\\\/www.lse.ac.uk\\\/granthaminstitute\\\/publication\\\/valuing-predictability\\\/\",\"name\":\"Valuing predictability - 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{"id":20859,"date":"2017-01-19T16:22:33","date_gmt":"2017-01-19T16:22:33","guid":{"rendered":"https:\/\/www.lse.ac.uk\/granthaminstitute\/?post_type=publication&p=20859"},"modified":"2024-09-18T17:24:13","modified_gmt":"2024-09-18T16:24:13","slug":"valuing-predictability","status":"publish","type":"publication","link":"https:\/\/www.lse.ac.uk\/granthaminstitute\/publication\/valuing-predictability\/","title":{"rendered":"Valuing predictability"},"content":{"rendered":"\n

How important is it to be able to predict the distant future?<\/p>\n

The authors of this paper study this question in a model of an agent who operates in a non-stationary stochastic environment. Payoffs depend on how well adapted activities are to current conditions, and activities may be adjusted to account for anticipated environmental changes, at a cost.<\/p>\n

The authors compute the value of prediction systems<\/em>, which produce forecasts of the future with a given profile of accuracy as a function of lead time in every period. This allows them to quantify the importance of predictive accuracy at each lead time. Even if adjustment costs, discount factors and long-run uncertainty are large, short-run predictability is often more important than long-run predictability.<\/p>\n

‘If you have to forecast, forecast often.’ Edgar R. Fiedler, The Three Rs of Economic Forecasting: Irrational, Irrelevant and Irreverent<\/em>, 1977<\/p>\n\n","protected":false},"excerpt":{"rendered":"\n

The authors of this paper study the question of how important it is to predict the distant future.<\/p>\n\n","protected":false},"author":23,"featured_media":0,"template":"","tags":[536,538,537],"publication-type":[435],"topic_area":[4690],"class_list":["post-20859","publication","type-publication","status-publish","hentry","tag-forecasting","tag-predictability","tag-prediction-system","publication-type-working-papers","topic_area-climate-science-and-impacts"],"acf":{"exclude_from_sync":{"ref_value":"field_560538b0e7350","value":"0","type":false,"post_type":""},"downloads":{"ref_value":"field_52f16cc1a80f2","value":["https:\/\/www.lse.ac.uk\/granthaminstitute\/wp-content\/uploads\/2017\/01\/Working-paper-260-millner-heyen-1.pdf"],"type":"download","post_type":""},"rss_newsletter":{"ref_value":"field_54f5c2c1544d8","value":"","type":false,"post_type":""},"profile_link":{"ref_value":"field_52f164b5189e9","value":["?post_type=profile&p=2253","daniel-heyen"],"type":"relationship","post_type":"profile"},"spotlight":{"ref_value":"field_52f80896506d3","value":"","type":false,"post_type":""},"show_translations_widget":{"ref_value":"field_6203d588c41e8","value":"0","type":false,"post_type":""}},"yoast_head":"\nValuing predictability - Grantham Research Institute on climate change and the environment<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.lse.ac.uk\/granthaminstitute\/publication\/valuing-predictability\/\" \/>\n<meta property=\"og:locale\" content=\"en_GB\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Valuing predictability - Grantham Research Institute on climate change and the environment\" \/>\n<meta property=\"og:description\" content=\"The authors of this paper study the question of how important it is to predict the distant future.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.lse.ac.uk\/granthaminstitute\/publication\/valuing-predictability\/\" \/>\n<meta property=\"og:site_name\" content=\"Grantham Research Institute on climate change and the environment\" \/>\n<meta property=\"article:modified_time\" content=\"2024-09-18T16:24:13+00:00\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Estimated reading time\" \/>\n\t<meta name=\"twitter:data1\" content=\"1 minute\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\\\/\\\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\\\/\\\/www.lse.ac.uk\\\/granthaminstitute\\\/publication\\\/valuing-predictability\\\/\",\"url\":\"https:\\\/\\\/www.lse.ac.uk\\\/granthaminstitute\\\/publication\\\/valuing-predictability\\\/\",\"name\":\"Valuing predictability - 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