ABSTRACT
Forecasting provides a prospective vision of policy outcomes, enlarging capacities for understanding, control, and societal guidance. Forecasts, whether based on expert judgment, on the extrapolation of historical trend, or on technically sophisticated econometric models, are prone to errors based on faulty or implausible assumptions; the unrecognized effects of institutional incentive systems; and on the complexity of policy issues in areas ranging from health, welfare, and education to science, technology, and the environment. This chapter provides an overview of the forms, functions, and performance of forecasting in policy analysis, stressing a range of criteria for assessing the strengths and limitations of different forecasting methods. It then compares and contrasts extrapolative, theoretical, and judgmental forecasting methods and their role in producing information about expected policy outcomes. The chapter concludes with a presentation of methods that combine the three approaches.
