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> does that not make it roughly equivalent to a coin flip? No. Intuition: predicting the outcome of a coin flip correctly 50% of the time is unimpressive, but
by InefficientRed 4y ago
> does that not make it roughly equivalent to a coin flip?
No.
Intuition: predicting the outcome of a coin flip correctly 50% of the time is unimpressive, but predicting the outcome of a D20 dice roll correctly 50% of the time is incredibly impressive.
- rco8786 4y agoIn this case the outcome is binary though, "Recession" or "No recession"
- heavenlyblue 4y agoIt's not binary, it's "is the recession going to happen in the next few months/years", so the prediction is a number. More like D20 in one of the neighbour threads. But not necessarily a D20, could be a D6 so less impressive.
- s1artibartfast 4y agoRollong a 20 vs not 20 is binary, but that doesn't mean it happens 50% of the time. Recession or not is binary, but that doesn't mean we have a 50% chance of entering one on a given day.
- satellite2 4y agoOver thousands of periods. And each time the prediction was no the outcome was no, and among the few times the predictions was yes it happened 50% of the time.
- InefficientRed 4y agoRecessions are forecast on a quarterly basis, so not thousands, but more than 20 between each recession (typically, historically). That's why I chose a D20 -- out of coin/dice/D6/D20/Roulette, it's the RNG that's most reasonably close to the number of quarters between recessions.
- stonemetal12 4y agoHow long have we been forecasting? More than 50 years or more than 200 quarters. 5/12 would be 7 misses out of 200, that means it was right 193 out of 200 times. That doesn't include false negatives of course. Actuals vs positive predictions tells you nothing interesting.
- InefficientRed 4y agoYeah there are many additional reasons this is different from a coin clip, but the confusion of predicting correctly 50% of the time in a 50/50 event versus 50% of the time for a 1/20+ event was the most glaring issue so I started with that one...
- InefficientRed 4y agoThe sides of the dice are financial quarters. The roll is the financial quarter that a recession starts. If recessions happened every other financial quarter then the outcome would be binary. But historically recessions not that common; they happen in less than 1 in 20 financial quarters. So the D20 analogy is actually something of an understatement.
- deleted 4y ago[deleted]
- 6gvONxR4sf7o 4y agoIt’s binary, but not balanced. Specifically, it’s predicting the beginning of a recession, and very few time periods are the beginning of a recession. So it’s like predicting that you’ll roll a 1 on a die. Flipping a coin for your prediction would say you’ll roll the 1 50% of the time, which is obviously wrong.