Assessing Uncertainty in Small Area Forecasts: State of the Practice and Implementation Strategy

Assessing Uncertainty in Small Area Forecasts: State of the Practice and Implementation Strategy Forecasts are needed for everyday decisions and must be in the form of numbers. Yet forecasts invariably turn out to be different than the numbers that actually occur. Yet, most producers of forecasts only present a deterministic view of the future in the form of point predictions. However, the presence of uncertainty is inherent in management or policy decisions and there is often concern that benefits are overstated and risks are understated. Such concerns are difficult to address by providing only point forecasts with no assessment of their uncertainty. Having a better understanding of uncertainty can enhance the usefulness of forecasts and make the work of forecasting agencies an even more valuable product for planners, policy makers, and the public. The purpose of this paper is twofold. First, it presents an overview of the current state-of-the-practice is assessing forecast uncertainty. Second, it offers a guidelines and options for implementing and building uncertainty into small area forecasting processes. There are options for assessing forecasting uncertainty that can and should be implemented by most, if not all, producers of forecasts. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Population Research and Policy Review Springer Journals

Assessing Uncertainty in Small Area Forecasts: State of the Practice and Implementation Strategy

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Publisher
Springer Journals
Copyright
Copyright © 2011 by Springer Science+Business Media B.V.
Subject
Social Sciences; Demography; Sociology, general; Population Economics
ISSN
0167-5923
eISSN
1573-7829
D.O.I.
10.1007/s11113-011-9210-9
Publisher site
See Article on Publisher Site

Abstract

Forecasts are needed for everyday decisions and must be in the form of numbers. Yet forecasts invariably turn out to be different than the numbers that actually occur. Yet, most producers of forecasts only present a deterministic view of the future in the form of point predictions. However, the presence of uncertainty is inherent in management or policy decisions and there is often concern that benefits are overstated and risks are understated. Such concerns are difficult to address by providing only point forecasts with no assessment of their uncertainty. Having a better understanding of uncertainty can enhance the usefulness of forecasts and make the work of forecasting agencies an even more valuable product for planners, policy makers, and the public. The purpose of this paper is twofold. First, it presents an overview of the current state-of-the-practice is assessing forecast uncertainty. Second, it offers a guidelines and options for implementing and building uncertainty into small area forecasting processes. There are options for assessing forecasting uncertainty that can and should be implemented by most, if not all, producers of forecasts.

Journal

Population Research and Policy ReviewSpringer Journals

Published: May 26, 2011

References

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