Forecasting Bias
The researchers behind a new working paper used a novel dataset to correlate economic forecasters’ political alignment and the predictions they make about GDP growth.
They found that although economics is often portrayed as an objective field suffering a minimum of ideological bias, political priors seem to play a significant role in these predictions, at least for Republican forecasters.
They found that in the US, Republican-affiliated forecasters projected, on average, 0.3–0.4% higher GDP growth under Republican presidential administrations, compared to Democrat-affiliated forecasters. This resulted in less accurate projections from Republican-affiliated forecasters when Republicans held the White House, and there were similar optimistic offsets when tax cuts dominated political discourse.
