A Forecast is Your Average Parallel Universe

Graeme Russell

What does a forecast tell you? When you see a prediction, how do you interpret it?

If you simulate the future, you may get a familiar-looking graph like this:

But what if we kept simulating the future? What other results could we expect to see? After all, like a parallel universe, one small change could lead to many other branching possibilities…

…and the possibilities can get chaotic very quickly

So how can we make sense of this? Well, with a statistical view of forecasts, we understand that there is a range of possibilities, but as the branches twist and overlap, some events stand out above the rest:

So really, a prediction is one representation of a range of possibilities (the middle), making a forecast your average parallel universe.

Did this change your perspective on what a forecast is? Do you/Are you considering using a forecast in your business? Please reach out!

Reference: 1.7 The statistical forecasting perspective | Forecasting: Principles and Practice (3rd ed) (otexts.com)