MCViewPoint

Opinion from a Libertarian ViewPoint

The Problem With Forecasting Outcomes of Complex Human Events: The Goldman Sachs Failure

Posted by M. C. Fox on July 18, 2018

http://www.economicpolicyjournal.com/2018/07/the-problem-with-forecasting-outcomes.html

Bloomberg informs:

Goldman Sachs’ statistical model for the World Cup sounded impressive: The investment bank mined data about the teams and individual players, used artificial intelligence to predict the factors that might affect game scores and simulated 1 million possible evolutions of the tournament. The model was updated as the games unfolded, and it was wrong again and again. It certainly didn’t predict the final opposing France and Croatia on Sunday.

The failure to accurately predict the outcome of soccer games is a good opportunity to laugh at the hubris of elite bankers, who use similar complex models for investment decisions… 

Goldman Sachs’ statistical model for the World Cup sounded impressive: The investment bank mined data about the teams and individual players, used artificial intelligence to predict the factors that might affect game scores and simulated 1 million possible evolutions of the tournament. The model was updated as the games unfolded, and it was wrong again and again. It certainly didn’t predict the final opposing France and Croatia on Sunday.

The failure to accurately predict the outcome of soccer games is a good opportunity to laugh at the hubris of elite bankers, who use similar complex models for investment decisions…

Goldman Sachs’ economists fed oodles of data about teams and individual players into four different types of machine-learning models to figure out the statistics’ predictive power [in 2018]. Then they ran simulations to compute the most likely score of each game. The first results of adding player-level variables, such as an athlete’s average ranking on the team and measures of his defensive and offensive abilities, looked encouraging. Thanks to the use of more granular data, made possible by AI, this year’s model should have worked better than the 2014 one.

If anything, it worked worse.

Be seeing you

 

Curly

“I’m trying to think but nothing happens!”

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

 
%d bloggers like this: