Forecasting today is an enormous business. We are accustomed to hearing so-called experts opine on the future virtually every day. It is an accepted part of our culture. We hardly think twice about it, being accustomed to what in many cases is fortune-telling and omens. In that sense, the world is as pagan as it has ever been.
Readers may be surprised by that statement. Surely, forecasting isn’t on the same level as enchanting, sorcery, divining, astrology, or the interpretation of omens. Isn’t forecasting much more advanced and scientific than it was a century or several millennia ago?
Not necessarily. There are different types of forecasts. For example, weather forecasting is more advanced today than ever before. With weather satellites proliferating, there have been tremendous improvements in global data collection over the last decade or so. Computing power has also moved forward rapidly.
As such, short-term forecasts (two days in advance or so) of precipitation or temperature have become more useful. All the same, weather forecasting still attracts quite a bit of derision because it is not 100% accurate. Indeed, long-term weather forecasts are still very unreliable. Nonetheless, they are accurate enough over the short-term to be generally helpful.
We can agree that forecasts applying to the physical realm (things subject to physical laws) have improved, though are still very poor in many of these fields—for example, volcanology or seismology. The prediction of an earthquake event has not been mastered yet.
But what about human factors—future events and trends pertaining to human culture, fashion, financial markets, economies, geopolitics, peace and human advancement?
Here we discover that predictions are extremely unreliable. In fact, we find that forecasts are even less accurate than simple probability would suggest. Why? Human beings as a whole have certain biases. They love to hear what they want to hear. They all prefer what pleases the flesh. Observing human nature, we all understand this to be the case.
An article by Tim Harford (“How to See into the Future”) documents the unreliability of human forecasts. A short excerpt follows:
Billions of dollars are spent on experts who claim they can forecast what’s around the corner, in business, finance and economics. Most of them get it wrong. […] Former consultant William Sherden reckoned in 1998 that forecasting was a $200bn industry—$300bn in today’s terms—and the bulk of the money was being made in business, economic and financial forecasting.
It is true that forecasting now seems ubiquitous. Data analysts forecast demand for new products, or the impact of a discount or special offer; scenario planners produce broad-based narratives with the aim of provoking fresh thinking; nowcasters look at Twitter or Google to track epidemics, actual or metaphorical, in real time; intelligence agencies look for clues about where the next geopolitical crisis will emerge; and banks, finance ministries, consultants and international agencies release regular prophecies covering dozens, even hundreds, of macroeconomic variables.
Real breakthroughs have been achieved in certain areas, especially where rich datasets have become available—for example, weather forecasting, online retailing and supply-chain management. Yet when it comes to the headline-grabbing business of geopolitical or macroeconomic forecasting, it is not clear that we are any better at the fundamental task that the industry claims to fulfill—seeing into the future.
Mr. Harford comes to a similar conclusion: Human beings are not good at predicting human behavior. Financial markets, politics, peace, economies … etc. are all connected to human behavior.
Futurists, experts of any kind, and politicians (to name only some) all like to make positive predictions. In no field is there greater bias than in economic and financial forecasting. I have experienced this firsthand many times. We all know that financial crises occur from time to time and that massive declines in stock and bond markets can occur. Yet, one dare not predict any such likelihood. You will be severely scorned.
I remember one occasion years ago where I observed this tendency in almost cartoon fashion. I was being interviewed by a large group of journalists in Hong Kong. Every time I answered their questions in a manner that they liked and would be eagerly received by their readers, they wrote vigorously on their memo pads (this was more than two decades ago … no tablets and iPhones as of yet). However, when I made a tentative comment or pointed to an unsustainable development that could lead to a financial market decline, they became sullen and stopped writing. They would only publish auspicious statements. It was bizarrely hilarious.
It is a bias that certainly infuses the financial forecasting business. Consider the bias of stock market analysts who grossly favor “buy” recommendations rather than sells. A purchase recommendation is more readily received than a “negative” sell.
Just why is it that human beings are poor at forecasting their own behavior and that of societies overall? The Creator of mankind has the answer, and it is found in the Bible that He has inspired for our benefit.
Predictions of Sin Are Profitable
Humans as a whole have certain biases in their behavior. As mentioned, they love to hear what they want to hear. They all naturally prefer that which pleases the flesh. Apostle Paul states that “Those who live according to the flesh have their minds set on what the flesh desires” (Romans 8:5). It is this “fleshly” receptivity that drives Madison Avenue and much of commerce.
The fact of the matter is that human beings are all sinners and they generally take pleasure in their sin—unless, of course, they have been justified through Jesus Christ. Even so, people all have the same “hard-wiring” in the human brain (the flesh), according to the Bible. The Bible points to key vulnerabilities of the human: “For everything in the world—the lust of the flesh, the lust of the eyes, and the pride of life—comes not from the Father but from the world” (1 John 2:16).
It is these same vulnerabilities or natural tendencies that the new scientific field of neural programming (also called neuroeconomics or neurofinance, when applied to economics and markets) seeks to understand. As such, these studies are quite revealing. As with many things, knowledge can have both good and bad applications and can be used for advantage.
Neurofinance is one application that seeks to understand how human behavioral biases can be predicted and better harnessed for predicting investment behaviors. This can afford great advantages to Wall Street marketers and perhaps specialized investment managers.
Neural programming studies are also applied to achieve more effective and response-generating marketing. The “hard-wiring” of the human brain—what some scientists call the reptilian part of our brain—reflects our instinctive preferences … the things that we will want without conscious thinking. In effect, these marketers are trying to use science to better circumvent our critical thinking, by appealing more directly to the “flesh” so as to be successful in selling us more services and merchandise.
Neuroeconomics is one area of prediction that is likely to prove useful to its practitioners. Why? Because it seeks to take advantage of the natural lustful proclivities of natural man. After all, sin is not going out of style. If anything, as godliness declines during these last days (See Jude’s description of these last-day trends. The terms “ungodly” and “ungodliness” are mentioned 6 times.), neuroeconomics will likely prove to be very profitable for its practitioners.
The Christian (the new person born of the Spirit) in principle should not be a victim of the world’s prevailing invitations to respond to fleshly lusts. According to Paul: “[…] but those who live in accordance with the Spirit have their minds set on what the Spirit desires” (Romans 8:5).
Neuroeconomics should find no advantage with their new marketing techniques to such a person. Says Apostle Paul, “It is God’s will that you should be sanctified: that you should avoid sexual immorality; that each of you should learn to control your own body in a way that is holy and honorable, not in passionate lust like the pagans, who do not know God” (1 Thessalonians 4:3-5).
Paul reemphasizes this point: “Put to death, therefore, whatever belongs to your earthly nature: sexual immorality, impurity, lust, evil desires and greed, which is idolatry” (Colossians 3:5).
In fact, Paul goes one step further, stating that it is also wrong to take advantage of sinful human nature: “[…] and that in this matter no one should wrong or take advantage of a brother or sister. The Lord will punish all those who commit such sins, as we told you and warned you before” (1 Thessalonians 4:6).