Judgmental Forecast

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Judgmental Forecast

A forecast made on subjective information. A judgmental forecast is made by a person thought to be knowledgeable about the company or market about which the forecast is being made. It may consider quantitative information, but it relies on a great deal of subjective feeling.

References in periodicals archive ?

Improving Forecasting Accuracy by Combining Statistical and Judgmental Forecasts in Tourism.

Building forecasting models for restaurant owners and managers: a case study

Section V considers robustness analysis and extensions, showing in particular that judgmental forecasts have adjusted faster than the others to capture developments during the Great Recession.

How useful are estimated DSGE model forecasts for central bankers?

In a later work Sanders and Ritzman (2004), distinguishes between the marketing function, which more typically generates judgmental forecasts, and operations, which rely more heavily on quantitative data, and suggests integration techniques for these approaches.

The PMI, the T-bill and inventories: a comparative analysis of neural network and regression forecasts

In general, they found the judgmental forecasts to be less than optimal.

An overview of forecasting error among international manufacturers

Also, Makridakis (1987) indicated that managers should prepare a separate judgmental forecast, and then objectively combine it with quantitative forecasts, rather than use judgment for the blending process itself.

Forecasting foreign exchange rates using objective composite models

Cognitive biases do much to explain the limitations of judgmental forecasts, but Tetlock's work suggests an additional explanation.

Making the best use of judgmental forecasting

Future research related to the PMI should explore the use of combining judgmental forecasts with the quantitative forecasting of the PMI.

As the PMI turns: a tool for supply chain managers

The main claims Sims makes are, first, that the Federal Reserve forecasts well, especially when forecasting inflation; second, that the informational contents of different forecasts are highly correlated, so that strong claims of superiority of one forecast over another should be treated as suspect; and third, that there does not appear to be strong evidence that the judgmental forecasts of the Federal Reserve are superior (as measured by the root mean square forecast error) to its model-based forecasts.

The role of models and probabilities in the monetary policy process

One difficulty with judgmental forecasts, however, is that it is hard, if not impossible, for an outside observer to trace the source of systematic forecast errors because there is no formal model of how the data were used.

Vector Autoregressions: Forecasting and Reality

Much of this work has concentrated on forecasts produced by various time series methods of extrapolation for individual series, although there have also been other studies comparing econometric and/or judgmental forecasts with the consensus.

Consensus forecasts in planning

Averaging can also work with purely judgmental forecasts. The error associated with these forecasts, much less averages of them, have not been studied in nearly as much depth as quantitative forecasts, so the guidance on how many forecasts to average is not as definitive.

Structuring the revenue forecasting process

The advantages and limitations of economic models and judgmental forecasts are reviewed, and a process that incorporates features of both is recommended.