Joseph Effect

Joseph Effect

The tendency for persistent time series (0.50<H<1.00), to have trends and cycles. The term "Joseph Effect" was coined by Mandelbrot in reference to Joseph's interpretation of Pharaoh's dream of seven fat years followed by seven lean years.

Joseph Effect

The concept that any movement in a given time series is more likely to be part of a trend than it is to be random. The extent to which a phenomenon is a Joseph effect is quantified on the Hurst component, which is measured between 0 and 1. A Hurst reading of more than 0.5 indicates that a movement is less random and therefore more likely to be a Joseph effect. The term comes from the Old Testament story in which Joseph predicted seven years of plenty followed by seven years of famine.