IDEAS home Printed from https://ideas.repec.org/p/ems/eureir/10565.html
   My bibliography  Save this paper

What drives the relevance and quality of experts' adjustment to model-based forecasts?

Author

Listed:
  • Franses, Ph.H.B.F.
  • Legerstee, R.

Abstract

Experts frequently adjust statistical model-based forecasts. Sometimes this leads to higher forecast accuracy, but expert forecasts can also be dramatically worse. We explore the potential drivers of the relevance and quality of experts' added knowledge. For that purpose, we examine a very large database covering monthly forecasts for pharmaceutical products in seven categories concerning thirty-five countries. The extensive results lead to two main outcomes which are (1) that more balance between model and expert leads to more relevance of the added value of the expert and (2) that smaller-sized adjustments lead to higher quality, although sometimes very large adjustments can be beneficial too. In general, too much input of the expert leads to a deterioration of the quality of the final forecast.

Suggested Citation

  • Franses, Ph.H.B.F. & Legerstee, R., 2007. "What drives the relevance and quality of experts' adjustment to model-based forecasts?," Econometric Institute Research Papers EI 2007-43, Erasmus University Rotterdam, Erasmus School of Economics (ESE), Econometric Institute.
    • Handle: RePEc:ems:eureir:10565
    as

    Download full text from publisher

    File URL: https://repub.eur.nl/pub/10565/ei2007-43.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Lawrence, Michael & Goodwin, Paul & O'Connor, Marcus & Onkal, Dilek, 2006. "Judgmental forecasting: A review of progress over the last 25 years," International Journal of Forecasting, Elsevier, vol. 22(3), pages 493-518.
    2. Goodwin, Paul, 2000. "Improving the voluntary integration of statistical forecasts and judgment," International Journal of Forecasting, Elsevier, vol. 16(1), pages 85-99.
    3. Robert C. Blattberg & Stephen J. Hoch, 1990. "Database Models and Managerial Intuition: 50% Model + 50% Manager," Management Science, INFORMS, vol. 36(8), pages 887-899, August.
    4. Bunn, Derek W. & Salo, Ahti A., 1996. "Adjustment of forecasts with model consistent expectations," International Journal of Forecasting, Elsevier, vol. 12(1), pages 163-170, March.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Philip Hans Franses & Rianne Legerstee, 2010. "Do experts' adjustments on model-based SKU-level forecasts improve forecast quality?," Journal of Forecasting, John Wiley & Sons, Ltd., vol. 29(3), pages 331-340.
    2. Philip Hans Franses & Michael McAleer & Rianne Legerstee, 2009. "Expert opinion versus expertise in forecasting," Statistica Neerlandica, Netherlands Society for Statistics and Operations Research, vol. 63(3), pages 334-346, August.
    3. De Baets, Shari & Harvey, Nigel, 2018. "Forecasting from time series subject to sporadic perturbations: Effectiveness of different types of forecasting support," International Journal of Forecasting, Elsevier, vol. 34(2), pages 163-180.
    4. Franses, Philip Hans & Legerstee, Rianne, 2009. "Properties of expert adjustments on model-based SKU-level forecasts," International Journal of Forecasting, Elsevier, vol. 25(1), pages 35-47.
    5. Legerstee, R. & Franses, Ph.H.B.F. & Paap, R., 2011. "Do experts incorporate statistical model forecasts and should they?," Econometric Institute Research Papers EI2011-32, Erasmus University Rotterdam, Erasmus School of Economics (ESE), Econometric Institute.
    6. Arvan, Meysam & Fahimnia, Behnam & Reisi, Mohsen & Siemsen, Enno, 2019. "Integrating human judgement into quantitative forecasting methods: A review," Omega, Elsevier, vol. 86(C), pages 237-252.
    7. Rianne Legerstee & Philip Hans Franses, 2014. "Do Experts’ SKU Forecasts Improve after Feedback?," Journal of Forecasting, John Wiley & Sons, Ltd., vol. 33(1), pages 69-79, January.
    8. Franses, Philip Hans & Kranendonk, Henk C. & Lanser, Debby, 2011. "One model and various experts: Evaluating Dutch macroeconomic forecasts," International Journal of Forecasting, Elsevier, vol. 27(2), pages 482-495.
    9. Philip Hans Franses, 2021. "Modeling Judgment in Macroeconomic Forecasts," Journal of Quantitative Economics, Springer;The Indian Econometric Society (TIES), vol. 19(1), pages 401-417, December.
    10. P H Franses & R Legerstee, 2011. "Experts' adjustment to model-based SKU-level forecasts: does the forecast horizon matter?," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 62(3), pages 537-543, March.
    11. Franses, Philip Hans, 2013. "Improving judgmental adjustment of model-based forecasts," Mathematics and Computers in Simulation (MATCOM), Elsevier, vol. 93(C), pages 1-8.
    12. Song, Haiyan & Gao, Bastian Z. & Lin, Vera S., 2013. "Combining statistical and judgmental forecasts via a web-based tourism demand forecasting system," International Journal of Forecasting, Elsevier, vol. 29(2), pages 295-310.
    13. Petropoulos, Fotios & Fildes, Robert & Goodwin, Paul, 2016. "Do ‘big losses’ in judgmental adjustments to statistical forecasts affect experts’ behaviour?," European Journal of Operational Research, Elsevier, vol. 249(3), pages 842-852.
    14. Bert de Bruijn & Philip Hans Franses, 2012. "Managing Sales Forecasters," Tinbergen Institute Discussion Papers 12-131/III, Tinbergen Institute.
    15. Perera, H. Niles & Hurley, Jason & Fahimnia, Behnam & Reisi, Mohsen, 2019. "The human factor in supply chain forecasting: A systematic review," European Journal of Operational Research, Elsevier, vol. 274(2), pages 574-600.
    16. Lawrence, Michael & Goodwin, Paul & O'Connor, Marcus & Onkal, Dilek, 2006. "Judgmental forecasting: A review of progress over the last 25 years," International Journal of Forecasting, Elsevier, vol. 22(3), pages 493-518.
    17. Baecke, Philippe & De Baets, Shari & Vanderheyden, Karlien, 2017. "Investigating the added value of integrating human judgement into statistical demand forecasting systems," International Journal of Production Economics, Elsevier, vol. 191(C), pages 85-96.
    18. Leitner, Johannes & Leopold-Wildburger, Ulrike, 2011. "Experiments on forecasting behavior with several sources of information - A review of the literature," European Journal of Operational Research, Elsevier, vol. 213(3), pages 459-469, September.
    19. Fildes, Robert & Goodwin, Paul & Lawrence, Michael & Nikolopoulos, Konstantinos, 2009. "Effective forecasting and judgmental adjustments: an empirical evaluation and strategies for improvement in supply-chain planning," International Journal of Forecasting, Elsevier, vol. 25(1), pages 3-23.
    20. Franses, Philip Hans, 2008. "Merging models and experts," International Journal of Forecasting, Elsevier, vol. 24(1), pages 31-33.

    More about this item

    Keywords

    expert forecasts; judgemental adjustment;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ems:eureir:10565. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: RePub (email available below). General contact details of provider: https://edirc.repec.org/data/feeurnl.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.