No-one any longer reckons on his own deathīut assumes that this disaster will come to someone else. In conflict, urging their passions to excess.įor whenever war comes to be voted on by the people, Make a puffed-up answer, when you have less to be confident about.įor we should not trust in the hope (elpis) which has engaged many cities Words on the grounds that you have a free city, Take thought, and do not, in your rage at my The herald warns Theseus against proposing war against Thebes to the people of Athens (476–91, trans. (Theseus has intervened on behalf of Argos’ grieving mothers and their king). In Euripides’ tragedy The Suppliant Women, a play performed before and audience of thousands of citizens of Athens’ democracy, there is a debate between Theseus, the mythical king of Athens, and a Theban herald who has come to tell him that the tyrant of Thebes, Creon, will not give back the unburied bodies of the Argives’ dead, following a battle between Argos and Thebes. But on any interpretation, the myth illustrates the Greeks’ sense that the managing of expectations was a really significant part of what it meant to be human.Īs for ‘optimism bias’, well, in their own way, the ancient Greeks already knew about this tendency too, and they used the format of mass entertainment to discuss it. The symbolism and meaning of this are not clear. Though she was quick to close the container, only one thing was left behind inside: elpis. In the famous myth of Pandora as told by Hesiod, she opened a jar left in her care containing sickness, death and many other unspecified evils which were then released into the world. The ancient Greek word for ‘hope’ is elpis but it is often best rendered as ‘expectation’: one can have elpis of good outcomes but also elpis of bad ones. But they also knew the importance being realistic. The ancient Greeks understood the psychological and ideological value of positive thinking about future risks and opportunities. But they can also cause projects and policies to fail disastrously, take too long or cost too much. Occasionally, such errors of calculation can nevertheless result in beneficial innovations and successes. 259).* Optimism bias often leads to the underestimation of risks when decision-taking. Their experiments and observations document a tendency to underestimate the costs and durations of projects, to ‘focus on the causal role of skill and neglect the role of luck’ and to ‘focus on what we know and neglect what we do not know’ (Kahneman, 2011, p. Cognitive scientists call this ‘optimism bias’. As individuals, as a community or as a nation, we can be overconfident about our prospects despite plenty of evidence that real trouble lies ahead. The psychological tendency to ‘hope for the best’ rather than ‘plan for the worst’ is very human and understandable. The reasons for this are multiple and yet variable according to each country concerned: complacency incompetence stupidity understandably sketchy scientific data and limited evidence bad luck legitimate worries about the impact on the economy, jobs, education and people’s overall wellbeing electoral-political priorities not being Jacinda Ardern, Angela Merkel, or Tsai Ing-wen.īut in some cases, those leaders of places which have done, or are doing, badly also seem to have convinced themselves that their country would fare better than others. Some of them have been lifting their ‘lockdowns’ too quickly. I also attach a revised dataset that includes greater detail on the WEO forecast errors and the Stata do file used to generate the estimates reported in my note.All over the world, certain political leaders were too slow to act in the face of the Coronavirus pandemic. I conclude that there is no evidence that growth outcomes are affected by WEO forecast accuracy. I demonstrate this more formally in the attached note. The unit coefficient in the BW estimates implies that the growth outcome drops out of the equations. With a 4% forecast and a 4% outcome, there will be no error and hence no growth impact. Instead, we can examine the impact of a reduction of the World Economic Outlook (WEO) forecast from 5% to 4%. If we think in terms of a hypothetical experiment, the forecast error would not be a manipulable quantity. Put like this, it is clear that the inference is invalid. If growth is forecast at, say, 5% per annum for a particular country and the outcome is 4%, they estimate a 1% growth reduction. The estimated impact is, in their words, “sizable”. Beaudry and Willems (BW) argue that over-optimistic macroeconomic forecasts, as represented by the IMF’s, result in lower GDP growth over the following years.
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