Forecast bias

A forecast bias occurs when there are consistent differences between actual outcomes and previously generated forecasts of those quantities; that is: forecasts may have a general tendency to be too high or too low. A normal property of a good forecast is that it is not biased.^[1]

As a quantitative measure, the "forecast bias" can be specified as a probabilistic or statistical property of the forecast error. A typical measure of bias of forecasting procedure is the arithmetic mean or expected value of the forecast errors, but other measures of bias are possible. For example, a median-unbiased forecast would be one where half of the forecasts are too low and half too high: see Bias of an estimator.

In contexts where forecasts are being produced on a repetitive basis, the performance of the forecasting system may be monitored using a tracking signal, which provides an automatically maintained summary of the forecasts produced up to any given time. This can be used to monitor for deteriorating performance of the system.

References

↑ APICS Dictionary 12th Edition, American Production and Inventory Control Society. Available for download at www.apics.org/Resources/APICSDictionary.htm.

Biases

Cognitive biases	List Acquiescence Anchoring Attentional Attribution Belief Choice-supportive Confirmation Congruence Correspondence Halo effect Hindsight Hostile attribution Memory biases Outcome Response Self-serving Status quo Survivorship

Statistical biases	Estimator Information Lead time Omitted-variable Sampling Selection Self-selection Social desirability Spectrum Systematic error Systemic

Other biases	Academic FUTON Media Publication Reporting

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Forecast bias

See also

References