Forecasting predicts events, situations and outcomes through scientific methods such as statistical analysis and comparison with past situations. Meteorology, finance, technology and politics all use forecasting. Weather forecasting is the most common type, while finance uses it to predict trends in stock markets and economics. Technological advances can also be predicted, and political science employs exit polls and early voting results to forecast election outcomes.
Forecasting is the prediction of events, situations, and outcomes. This is a scientific process and should not be confused with psychic prediction or prophecy, which is ignored by most scientific authorities. Forecasting methods include comparison with similar situations in the past, observation of current trends and statistical analysis; often these are also educated guesses. Most forecasts involve a degree of uncertainty due to variables that cannot be predicted. Meteorology, technology, and politics are all fields that employ some form of forecasting.
The science of meteorology, or weather forecasting, is the most common type of forecast in everyday life. Forecasting methods employed by meteorologists include satellite photography; analysis of geographical, temperature and atmospheric data; and comparison with previous conditions in the same geographical area. This science has advanced to the point that it can make reasonably accurate predictions of weather conditions five to seven days in the future. Beyond this, however, the variables increase so much that the accuracy of predictions begins to collapse. Weather forecasts are readily available through a variety of media and allow people to plan for sudden changes in their local environment.
In finance and economics, forecasting methods are used to predict trends in stock markets, trade, and the value of commodities. Speculation about future profits and trading forms a large part of stock market activity. The predicted effects of events such as wars or disasters can have a greater effect on stock markets than the actual effects that ultimately occur. Effective forecasting methods can have such a pronounced effect on financial markets that some are regulated by law. Insider trading, for example, occurs when a person buys or sells stock based on inside knowledge that isn’t available to the general public; this is illegal in the US and many other countries.
Technological advances can be successfully predicted by forecasting methods. Moore’s law famously predicts that technology gets smaller, smarter, and cheaper at regular intervals that can be predicted with a great degree of accuracy. This allows you to develop devices based on a technology that doesn’t exist yet, but will be available in months or years. Other sciences have their own methods of prediction, often a calculation of the probability of an event occurring. Astronomers, for example, can predict the movement of comets and meteors based on the gravitational fields of nearby planets, moons and stars.
Political science is another field that successfully employs forecasting methods. In this case, news organizations and political parties want to know the outcome of an election before all the votes have been cast. They do this with exit polls and analysis of early voting results. This is especially straightforward in the United States, which generally has only two political parties in most ballots. As with other forecasting methods, this is a measure of probability, not an exact forecast; Survey reporting often mentions the margin of error that applies to the expected results.
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