Monday, October 29, 2018

Becker Friedman Expectations Conference

I just returned from a great BFI Conference at U Chicago, Developing and Using Business Expectations Data, organized by Nick Bloom and Steve Davis.

Wonderfully, density as opposed to point survey forecasts were featured throughout. There was the latest on central bank surveys (e.g., Binder et al.), but most informative (to me) was the emphasis on surveys that I'm less familiar with, typically soliciting density expectations from hundreds or thousands of C-suite types at major firms. Examples include Germany's important IFO survey (e.g., Bachman et al.), the U.S. Census Management and Organizational Practices Survey (e.g., Bloom et al.)., and fascinating work in progress at FRB Atlanta. 

The Census survey is especially interesting due to its innovative structuring of histogram bins. There are no fixed bins. Instead users give 5 bins of their own choice, and five corresponding probabilities (which add to 1). This solves the problem in fixed-bin surveys of  (lazy? behaviorally-biased?) respondents routinely and repeatedly assigning 0 probability to subsequently-realized events.