Simple versus complex forecasting - Simple wins
While it has been argued that simple rules for forecasting do better than complex rules, many are skeptical of this conclusion. There is the view that to compete in competitive markets your edge should be complexity. However, the data just does not support that conclusion. It is better to follow the advice of William Ockham. My confidence in simplicity is not based on a belief but on data that supports this conclusion. A recent paper by Kersten Green and J. Scott Armstrong called "Simple versus Complex Forecasting: The Evidence" shows that when direct comparisons are made simple wins. Simplicity in forecasting requires that (1) method, (2) representation of cumulative knowledge, (3) relationships in models, and (4) relationships among models, forecasts, and decisions are all sufficiently uncomplicated as to be easily understood by decision-makers. Our review of studies comparing simple and complex methods— including those in this special issue—found 97 comparisons in 32...