Economic update

Mounting evidence of Superforecaster success

There is mounting evidence of the superiority of the Superforecasting approach, which Economics Explored hosts Gene Tunny and Tim Hughes discussed with Warren Hatch, CEO of Good Judgment, on an episode earlier this year (see How to be a superforecaster, or at least a better forecaster). Superforecasting is an approach to forecasting that, as the blurb for the 2015 book Superforecasting notes, “involves gathering evidence from a variety of sources, thinking probabilistically, working in teams, keeping score, and being willing to admit error and change course.”  

The success of Good Judgment’s superforecasters in forecasting the US Federal Reserve’s policy decisions was profiled in the New York Times last month. Good Judgment has been asking its superforecasters an ongoing series of questions about the upcoming three meetings of the Fed, asking if they will cut, hold, or raise. For the four meetings so far in 2023, the superforecasters were spot on with their probabilities for three hikes and a pause. For the next three meetings, they forecast two hikes followed by a longer pause. 

Good Judgement data scientist Chris Karvetski has prepared an analysis showing the superforecasters extraordinary performance in forecasting the Federal Funds rate targeted by the Fed (see Superforecasting the Fed’s Target Range). He has calculated Brier scores of forecast accuracy, where 0 denotes perfect accuracy and 1 denotes perfect inaccuracy, for different sets of forecasts. The Superforecasters are doing 3x better than CME futures for the Federal Funds rate, with far less volatility.

Separately, superforecasting pioneer and Good Judgment co-founder Philip Tetlock and his research colleagues just released a study on existential risk with interesting approaches to generate forecasts for low probability but high impact events, such as an AI apocalypse (see Results from the 2022 Existential Risk Persuasion Tournament). This study was summarised by The Economist earlier this month: What are the chances of an AI apocalypse? Thankfully, as The Economist observes:  

Professional “superforecasters” are more optimistic about the future than AI experts.

For more information on the superforecasting approach, check out the Economics Explored podcast episode from earlier this year:

Superforecasting w/ Warren Hatch, CEO of Good Judgment – EP176 – Economics Explored

Several clips from the video of the interview are available via YouTube. The first clip is “What Makes a Superforecaster?”:

It identifies the importance of being cognitively reflective and having good pattern recognition skills. Incidentally, one way to identify people with good pattern recognition is to test them with Raven’s progressive matrices, as noted by Warren Hatch in this clip:

Another clip covers how we can overcome our own prejudices and biases to make better forecasts:

Tips from Warren in this regard include:

  • self-awareness;
  • getting feedback; and
  • forecasting teams in which members can interact with each other anonymously so everyone’s views are considered solely on their merits with no prejudices.
Economic update

Price controls aren’t a solution to inflation

Regular Economics Explored guest Darren Brady Nelson has republished some of his papers strongly criticising price controls, which some commentators are now suggesting as a solution to the accelerating inflation we’re seeing in advanced economies. Great points that Darren makes include the following:

The imposition of price controls to deal with inflation does not stop inflation. Rather it combines with inflation to produce a different and worse set of consequences than would inflation alone…

…Politicians have cited a plethora of reasons for introducing price controls – ie price ‘ceilings’ and ‘floors’. At the end of the day, whether they believe these reasons or not is irrelevant to economic outcomes. The outcomes are always bad. Price ceilings always lead to shortages and price floors always lead to surpluses, which often then lead to further government interventions such as rationing and subsidies as well as more taxation, regulation and money printing. Artificial government laws of price controls cannot overcome natural economic laws of supply and demand.

Check out Darren’s papers via the LinkedIn posts below.

Regarding inflation, I spoke about the UK’s highest recorded inflation rate in three decades in my latest livestream last Friday:

Please get in touch with any questions, comments and suggestions by emailing us at or sending a voice message via Economics Explored is available via Apple PodcastsGoogle Podcast, and other podcasting platforms.

Economic update

Crazy Crypto charts

The forthcoming EP120 of Economics Explored includes a discussion of the massive price growth seen in some cryptocurrencies over 2021. In the conversation, to be published at 12am UTC+10 on 1 January 2022, show host Gene Tunny refers to a couple of great charts from data service provider Macrobond showing just how incredibly crazy that growth has been.

The first chart shows the percentage growth in the value of different types of assets, including Bitcoin, gold, and stocks on the Nasdaq, relative to their levels at the start of the years they arguably each became the subject of a “bubble”. This clearly shows just how much of an outlier Bitcoin is. Note all data in this chart and the next one were current as at 29 December 2021.

Chart from Macrobond comparing Bitcoin’s price growth far exceeding that of other assets which have allegedly been subjects of speculative bubbles since the seventies, including gold, Japanese stocks, and tech stocks.

The second chart shows the mega growth in the value of a range of cryptocurrencies, including the Gala and Axie Infinity cryptocurrencies associated with their respective online games.

Chart from Macrobond showing incredible growth in the value of particular cryptocurrencies over 2021, particularly Gala (+31k%) and Axie Infinity (+17k%).

This post is for general information only, and does not constitute financial or investment advice. Please see a qualified professional regarding any investment decisions.

Please get in touch with any questions, comments and suggestions by emailing us at or sending a voice message via Economics Explored is available via Apple PodcastsGoogle Podcast, and other podcasting platforms.

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