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PPA 691 - Seminar in Public Policy Analysis: Lecture 5 - Forecasting Policy Futures

This document discusses forecasting in policy analysis. It describes three forms of forecasting: projection, prediction, and conjecture. The aims and limitations of forecasting are outlined. The document then discusses types of futures that can be forecast, including potential, plausible, and normative futures. It concludes by describing approaches to forecasting, including objects and bases that can be forecast, and appropriate techniques like time series analysis, theory mapping, causal modeling, and judgmental forecasting methods like the Delphi technique.

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0% found this document useful (0 votes)
265 views21 pages

PPA 691 - Seminar in Public Policy Analysis: Lecture 5 - Forecasting Policy Futures

This document discusses forecasting in policy analysis. It describes three forms of forecasting: projection, prediction, and conjecture. The aims and limitations of forecasting are outlined. The document then discusses types of futures that can be forecast, including potential, plausible, and normative futures. It concludes by describing approaches to forecasting, including objects and bases that can be forecast, and appropriate techniques like time series analysis, theory mapping, causal modeling, and judgmental forecasting methods like the Delphi technique.

Uploaded by

Aira Katong
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PPT, PDF, TXT or read online on Scribd
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PPA 691 – Seminar in Public

Policy Analysis

Lecture 5 – Forecasting Policy


Futures
Forecasting in Policy Analysis
 Forecasting is a procedure for producing factual
information about future states of society on the
basis of prior information about policy problems.
 Forms of forecasting.
– Projection.
• A forecast based on the extrapolation of current and historical
trends into the future.
– Prediction.
• A forecast based on explicit theoretical assumptions.
– Conjecture.
• A forecast based on informed or expert judgments about future
states of society.
Forecasting in Policy Analysis
 Aims of forecasting.
– Forecasts provide information about future
changes in policies and their consequences.
– Forecasting permits greater control through
understanding past policies and their
consequences, implying that the future is
determined by the past.
– Forecasting also enables us to shape the future
in an active manner, irrespective of what has
happened in the past.
Forecasting in Policy Analysis
 Limitations of forecasting.
– Forecast accuracy.
• Recent simple forecasting models have had huge errors in recent years
(as much as 50%) in econometric forecasting.
– Comparative yield.
• Both simple and complex theoretical models have been no more
accurate than simple extrapolative models and informed expert
judgment.
– Context.
• Institutional (nonprofit more accurate than business and government).
• Temporal (long-term less accurate than short-term).
• Historical (modern complexity reduces accuracy).
– “Assumption drag”.
Forecasting in Policy Analysis
 Types of futures.
– Potential futures.
• Future societal states that may occur.
– Plausible futures.
• Future states that, on the basis of assumptions about causation
in nature and society, are believed to be likely if policymakers
do not intervene to redirect the course of events.
– Normative futures.
• Potential and plausible futures which are consistent with an
analyst’s conception of future needs, values, and opportunities.
• The specification of normative futures narrows the range of
potential and plausible futures, thus linking forecasts to
specific goals and objectives.
Forecasting in Policy Analysis
Table 1. Contrast between goals and objectives

CHARACTERISTIC GOALS OBJECTIVES


Broadly stated (. . . To Concrete (. . . Increase
upgrade the quality of the number of physicians
Specification of purposes health care) by 10 percent)
Formal ( . . . The Operational ( . . . The
quality of health care quality of health care
refers to the refers to the number of
accessibility of medical physicians per 100,000
Definition of terms services) persons . . .)

Unspecified ( . . . In the Specified ( . . . In the


Time period future) period 2006-2016)
Frequently quantitative
Nonquantitative ( . . . The number persons
(adequate health care covered per 1,000
Measurement procedure insurance) persons)
Specifically defined ( . . .
Broadly defined ( . . . Families with incomes
Treatment of target groups People in need of care) below $19,000)
Forecasting in Policy Analysis
 Sources of goals, objectives, and alternatives.
– Authority.
– Insight.
– Method.
– Scientific theories.
– Motivation.
– Parallel case.
– Analogy.
– Ethical systems.
Approaches to Forecasting
 Approaches to forecasting.
– Decide what to forecast, or determine the object
of the forecast.
– Decide how to make the forecast, or select one
or more bases for the forecast.
– Choose techniques that are most appropriate for
the object and base selected.
Approaches to Forecasting
 Objects.
– The object of a forecast is the point of reference
of a projection, prediction, or conjecture.
– Objects of forecasting.
• Consequences of existing policies.
• Consequences of new policies.
• Contents of new policies.
• Behavior of policy stakeholders.
Approaches to Forecasting
 Bases.
– The basis of a forecast is the set of assumptions
or data used to establish the plausibility of
estimates of consequences of existing or new
policies, the content of new policies, or the
behavior of policy stakeholders.
Approaches to Forecasting
 Bases (contd.).
– Bases for forecasts.
• Trend extrapolation (projection).
– The extension into the future of trends observed in the past.
– Based on inductive logic.
• Theoretical assumptions (prediction).
– Systematically structured and empirically testable sets of laws
or propositions that make predictions about the occurrence of
one event based on another.
– Based on deductive logic.
• Informed judgments (conjecture).
– Knowledge based on experience and insight, rather than
inductive or deductive reasoning.
– Based on retroductive logic.
Methods and Techniques of
Forecasting
APPROACH BASIS APPROPRIATE PRODUCT
TECHNIQUES
Extrapolative Trend extrapolation Classical time-series analysis Projections
forecasting Linear trend estimation
Exponential weighting
Data transformation
Catastrophe methodology
Theoretical forecasting Theory Theory mapping Predictions
Causal modeling
Regression analysis
Point and interval estimation
Correlational analysis
Judgmental forecasting Informed judgment Conventional Delphi Conjectures
Policy Delphi
Cross-impact analysis
Feasibility assessment
Methods and Techniques of
Forecasting
 Classical time-series analysis.
– Time series are made up four components.
• Secular trend.
• Seasonal variation.
• Cyclical fluctuations.
• Irregular movements.
– Linear trend estimation.
– Nonlinear time series.
• Oscillations.
• Cycles.
• Growth curves.
• Decline curves.
• Catastrophes.
Time – Series Example
Methods and Techniques of
Forecasting
 Linear forecasting example.
– Major disaster data set, 1953-2007.
• Disaster Declarations = 9.851 + .803 * years; R2 = .592.
– Where 1953 is set to zero.
• 1953 – 1971: Disaster Declarations = 13.516 + 0.340 * years;
R2 = .103.
• 1972 - 1988: Disaster Declarations = 71.419 - 1.551 * years;
R2 = .497.
• 1989 - 2007: Disaster Declarations = -9.368 + 1.281* years; R2
= .329.
• Projection for 2008 (55) using whole data set: 54.0.
• Projection for 2008 (55) using post-1988 set: 61.1.
Methods and Techniques of
Forecasting
 Theoretical forecasting.
– Theory mapping.
• Types of causal arguments.
– Convergent arguments.
– Divergent arguments.
– Serial arguments.
– Cyclic arguments.
• Procedures for uncovering the structure of an argument.
– Separate and number each assumption.
– Underline the words that indicate claims (“therefore”, “thus”,
“hence”).
– When specific words are omitted, but implied, supply the
appropriate logical indicators in brackets.
– Arrange number assumptions and claims in an arrow diagram that
illustrates the causal argument or theory.
Methods and Techniques of
Forecasting
 Example for theory mapping from Daniels
and Clark-Daniels.
– http://www.csub.edu/~rdaniels/Pages%20from
%20DanielsClarkDanielsIJMED.pdf
.
Methods and Techniques of
Forecasting
 Causal modeling and regression analysis.
– The creation of theoretical models on the basis
of previous research and logic.
– The testing of these models with causal analysis
methods such as path analysis and structural
equation modeling.
– Example:
• http://www.csub.edu/~rdaniels/Model%20of%20Pre
sidential%20Disaster%20Decision-Making.xls
.
Methods and Techniques of
Forecasting
 Judgmental forecasting.
– Delphi technique.
• Principles.
– Selective anonymity.
– Iteration.
– Informed multiple advocacy.
– Polarized statistical response.
– Structured conflict.
– Computer conferencing.
Methods and Techniques of
Forecasting
 Judgmental forecasting (contd.).
– Delphi technique (contd.).
• Steps.
– Issue specification.
– Selection of advocates.
– Questionnaire design.
• Forecasting items (probability of occurrence).
• Issue items (ranking of importance).
• Goal items (desirability and feasibility).
• Option items (alternatives).
– Analysis of first-round results.
– Development of subsequent questionnaires.
– Organization of group meetings.
– Preparation of final report.
Methods and Techniques of
Forecasting
 Delphi article.
– http://www.csub.edu/~rdaniels/ch3b1.pdf.

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