The Problem of Business Forecasting: Papers Presented at the Eighty-Fifth Annual Meeting of the American Statistical Association, Washington, D.C., December 27-29, 1923

The Problem of Business Forecasting: Papers Presented at the Eighty-Fifth Annual Meeting of the American Statistical Association, Washington, D.C., December 27-29, 1923

The Problem of Business Forecasting: Papers Presented at the Eighty-Fifth Annual Meeting of the American Statistical Association, Washington, D.C., December 27-29, 1923

The Problem of Business Forecasting: Papers Presented at the Eighty-Fifth Annual Meeting of the American Statistical Association, Washington, D.C., December 27-29, 1923

Excerpt

Human conduct is based largely upon forecast, and forecasts are based largely upon statistics. At first sight, this sweeping statement may seem far from the truth, so much of human conduct appears to have no rational basis whatever. Yet a little thought will show, first, that nearly everything men do in the present is done with the expectation that certain events will take place in the future; and, second, that the expectation itself grows out of events which are known or supposed to have taken place in the past. And that is precisely what we mean by rational conduct. It matters not what the question at issue may be. It may concern buying a radio set, choosing a career, insuring against accident, taking a train or planting a tree. In every case, the decision is made on the basis of expectations which, because of a number of past occurrences, appear to be reasonable. Even those events that sometimes seem to be prompted purely by emotion, such as getting married, are not exceptions to the rule. Among sane people, what we call irrational conduct does not differ from highly rational conduct in having no statistical basis. The difference lies in the adequacy of the statistics for the purpose at hand and in the way in which they are used. Men make many mistakes, to be sure. These mistakes, however, are seldom due to reckless disregard of the future. They are due mainly to one or both of two causes: first, the unreliability of the data; second, faulty reasoning. In short, forecasts based on statistics determine nearly everything that men do to-day because, throughout the centuries, only those men whose conduct . . .

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