The likelihood of drought in 2013 - the wisdom of the masses estimate
In his book “The Wisdom of Crowds”, James Surowiecki makes a compelling case that if you want to make a correct decision then large numbers of ordinary people can provide better advice than a small number of experts.
Surowiecki claims that if you ask a large enough sample of diverse, independent people to make a prediction or estimate a probability, and then average those estimates, the errors each individual makes in coming up with an answer will cancel themselves out. Each persons guess has two components: information and error (or signal and noise). The process of averaging tends to cancel out the errors, leaving the information.
On the other hand, small groups of experts tend not to have a diversity of opinion and nor have they necessarily come to their opinions independently. Nor do experts always provide information in a useful form. For example, experts might say that it is inevitable that H5N1 avian influenza will mutate into a form that can be spread between humans – but they can’t say when and won’t provide a probability that it will happen in a particular timeframe. Thus, it is hard for business and government planners to manage risks effectively or efficiently.
The opinions of the masses are important in another way, not mentioned by Surowiecki. They provide insight into what consumers are expecting to happen. The opinions will be a factor influencing their behaviour. They will also indicate perceived risks which they will expect governments and businesses to address.
Foreseechange has been researching the wisdom of the masses concept since 2005, covering a range of factors including economic, political, and climate. We prefer the term “masses” to Surowiecki’s “crowds” because the latter implies a group of people in close proximity and, therefore, not as diverse and independent as the masses.
In the case of drought, the perceived likelihood is higher than a year ago but not as high as at the end of 2009.