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Philip Tetlock is a professor of organizational behavior at the Haas Business School at the University of California-Berkeley.

Philip Tetlock is a professor of org ...

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Why the experts missed the crash

Thu, 2009-03-05 22:01 by Hans-Georg

Philip Tetlock is a professor of organizational behavior at the Haas Business School at the University of California-Berkeley.

Which forecasters should you trust on the direction of the economy and the markets? Ask Philip Tetlock, who knows the kind of expert worth listening to—and what to listen for.

By Eric Schurenberg, Money Magazine
Last Updated: February 18, 2009: 4:10 PM ET

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(Money Magazine)—You've probably never wanted expert insight more than today - and never trusted it less. After all, the intelligent, articulate, well-paid authorities voicing these opinions are the ones who created the crisis or failed to predict it or lost 30% of your 401(k) in it.

Yet we can't tear ourselves away. The crisis has brought record ratings to CNBC and its parade of talking heads. You're probably still entrusting your portfolio to the experts running mutual funds. Despite everything, we can't shake the belief that elite forecasters know better than the rest of us what the future holds.

The record, unfortunately, proves no such thing. And no one knows that record better than Philip Tetlock, 54, a professor of organizational behavior at the Haas Business School at the University of California-Berkeley. Tetlock is the world's top expert on, well, top experts. Some 25 years ago, he began an experiment to quantify the forecasting skill of political experts.

By the time he finished in 2003, Tetlock had signed up nearly 300 academics, economists, policymakers and journalists and mapped more than 82,000 forecasts against real-world outcomes, analyzing not just what the experts said but how they thought: how quickly they embraced contrary evidence, for example, or reacted when they were wrong. And wrong they usually were, barely beating out a random forecast generator.

But you shouldn't simply write all gurus off. Tetlock's research found that one kind of expert turns out consistently more accurate forecasts than others. Understanding what makes them better can help you make more reliable predictions in your own life. Tetlock explained it all to Money's former managing editor, Eric Schurenberg, in a recent interview. …

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