How can you improve your forecasting?  One of Superforecasting‘s most useful principles is “outside first.”  Suppose you have a lot of details about the Renzetti family, and you’re trying to guess whether it owns a pet.  It’s tempting to dwell on the details, but:

The first thing [superforecasters] would do is find out what percentage of American households own a pet.

Statisticians call that the base rate – how common something is within a broader class.  Daniel Kahneman has a much more evocative visual term for it.  He calls it the “outside view” – in contrast to the “inside view” which is the specifics of a particular case.  A few minutes with Google tells me about 62% of American households own pets.  That’s the outside view here… Then I will turn to the inside view – all those details about the Renzettis – and use them to adjust that initial 62% up or down.

It’s natural to be drawn to the inside view.  It’s usually concrete and filled with engaging detail we can use to craft a story about what’s going on.  The outside view is typically abstract, bare, and doesn’t lend itself readily to storytelling.

As far as I recall, I’ve yet to lose a bet I publicly blogged.  What’s my secret?  I doggedly take the outside view.  When long-run trends say X, and the “latest news” says Y, I go with X.  When Democrats won big in 2008, I saw good luck, not a new political regime.  That’s why, in 2009, I bet my former co-blogger Arnold Kling that the Republicans would regain control of one branch of the federal government by 2017.  I won in 2010.  During the Great Recession, I saw a bad business cycle, not a “new normal.”  That why, in 2013, I bet Tyler Cowen that unemployment will fall below 5% by 2033.  I am very close to winning already.  When anyone forecasts any specific major disaster, I scoff.  Disasters do happen, but almost all specific predictions of major disasters do not come to pass.  And that’s why I am eager to bet against such predictions

I sometimes joke that “news melts your brain.”  What I really mean is that news amplifies our misguided impulse to take the inside view of things.  To be a superforecaster, of course, you have to use the news to tweak the outside view.  But most people would be better forecasters if they ditched the news and relied on base rates alone.