22.214.171.124 Irrational Behaviour
(This is a current page, from the Patterns of Power Edition 3 book contents. An archived copy of this page is held at https://www.patternsofpower.org/edition03/3352a.htm)
All economic forecasting depends upon assumptions about the future, but the number of unpredictable factors (and the enormous number and variety of transactions) make precise forecasts impossible:
- Innovation can lead to new products and completely new markets.
- Geopolitical events cannot always be predicted with certainty. For example, Britain’s decision to leave the EU in a ‘Brexit’ was not forecast in the opinion polls or by most commentators – as reported in Uptin Saiid’s article, Here’s why the majority of Brexit polls were wrong; he wrote that:
“The U.K. EU referendum vote prompted a global massive market selloff as markets were priced in expecting a remain outcome. More than two trillion dollars were wiped out globally, the largest drop on record.”
- The weather has an economic impact.
Such factors are compounded by the complexity of the interactions between national economies.