Back 

Blog

THE NCSL BLOG

22

There is really nothing dirty about dirty forecasting.

At Thursday's Legislative session on the use of nontraditional—code for unusual, weird—indicators in revenue and budget forecasting, Bruce D. McDonald, professor at Indiana University, defended the practice.

Forecasting is difficult, he said. In fact, forecasts are always wrong. So instead of trying to actually be correct, he said, forecasters should aim for the smallest amount of error, to be the "least wrong." And to do that, he said, dirty forecasting can help.

While traditional budget and revenue forecasts rely on common performance measures, dirty forecasts incorporate coincidental current human behavior, "indicators for behaviors that have not yet flowed into the rest of the environment." Say what?

He's talking about skirt lengths, Super Bowl winners, lipstick purchases, cardboard box production, Sports Illustrated swimsuit covers. Get the picture?

For example, when an original AFC team wins the Super Bowl, the stock market declines. When the cover model on the swimsuit issue is American, the S & P soars. When cheap lipstick sales increase, people are worried about the economy. Simple really. But how accurate are they?

McDonald said these unusual indicators are amazingly consistent with reality, allowing forecasters to make changes in budget or revenue estimates before problems become visible. Used in conjunction with established processes, they can only help.

He's expanding his research on dirty forecasting into the Seattle area. That’s one of many good reasons to put next year's Legislative Summit in Seattle, Aug. 3-6, on your calendars today.

Speaking of Seattle and Super Bowls ... As a Denverite, I don’t even want to consider what last year's matchup foretold, but dirty must come in there somewhere!

Julie Lays is the editor of State Legislatures magazine.

Email Julie.

Posted in: NCSL, Public Policy
Actions: E-mail | Permalink |

Subscribe to the NCSL Blog

Click on the RSS feed at left to add the NCSL Blog to your favorite RSS reader. 

Blog Archives | By Category

About the NCSL Blog

This blog offers updates on the National Conference of State Legislatures' research and training, the latest on federalism and the state legislative institution, and posts about state legislators and legislative staff. The blog is edited by NCSL staff and written primarily by NCSL's experts on public policy and the state legislative institution.

NAVIGATE

Share this: 
New Members Welcome
We are the nation's most respected bipartisan organization providing states support, ideas, connections and a strong voice on Capitol Hill.

NCSL Member Toolbox

Denver

7700 East First Place
Denver, CO 80230
Tel: 303-364-7700 | Fax: 303-364-7800

Washington

444 North Capitol Street, N.W., Suite 515
Washington, D.C. 20001
Tel: 202-624-5400 | Fax: 202-737-1069

Copyright 2014 by National Conference of State Legislatures