The United Kingdom is preparing to leave the European Union. Mainstream political parties are breaking down across the Continent. Separatist movements are on the rise. Is Europe careening toward a cliff, or are these just bumps in the road to a more integrated Continental bloc?
Superforecasting can help us decide which is the more likely answer. With a combination of innate talent, training, teamwork and predictive aggregation, Superforecasting teams like Good Judgment have developed a unique approach to intelligence analysis that relies on quantitative forecasts of discrete events to predict a broader outcome. As Philip Tetlock and Dan Gardner have explained to Stratfor readers, and in their best-selling book Superforecasting, using numerical probabilities helps boost the accuracy, accountability and clarity of assessments. By contrast, the slippery "vague verbiage" of terms like "could" and "might" can signal a frustratingly wide array of possible outcomes. According to Stratfor Vice President of Strategic Analysis Rodger Baker, combining quantitative rigor with qualitative detail offers the best of both worlds, providing more meaning and context to numerical estimates.
Good Judgment's Future of Europe Index, produced in conjunction with Stratfor's team of Europe analysts, is designed to strike that balance.
With a combination of innate talent, training, teamwork and predictive aggregation, Superforecasting teams like Good Judgment have developed a unique approach to intelligence analysis that relies on quantitative forecasts of discrete events to predict a broader outcome.
Clustering: Making More Rigorous and Relevant Forecasts
Figuring out the probability of a single distinct event is tough. But tackling bigger topics made up of many of those events is even more challenging, in part because of a problem researchers call the "rigor-relevance tradeoff."
Consider the question posed at the beginning of this column: What does the future look like for European unity? The subject is highly relevant to the decisions world leaders must make today, but crafting a clear, rigorous and testable question about it is nearly impossible. What does "unity" really mean? How would we determine its strength or weakness? What time frame are we trying to examine?
Narrowing down the details — "Will Catalonia hold an independence referendum by the end of 2017?" — yields a much more testable proposition. But in checking all the boxes required to form a rigorous question, narrow topics lose their relevance to policymakers trying to determine the stability of the entire Continent down the line.
Good Judgment has pioneered a methodology aimed at solving that problem. By carefully crafting interrelated questions about discrete events that, in combination, shed light on a broader topic, analysts can boost the relevance of their forecast without compromising its rigor. In a research study sponsored and validated by the U.S. Intelligence Advanced Research Projects Activity from 2011-2015, the Good Judgment team showed how to boost the accuracy of individual forecasts, outperforming the collective forecasts of intelligence analysts in the U.S. government by 30 percent. Since then, Superforecasters have refined and expanded their approach to evaluate emerging consumer trends, inform product development and understand the factors driving commodity markets.
Indexing: Spotting Early Warning Signs
While the outcome of Catalonia's independence referendum may not be decisive for the future of Europe as a whole, the fact that Catalan voters favored a split from Spain's central government signals greater stress on European unity. The same would be true if a region of the United Kingdom were to seek a similar plebiscite, for example, or if the European Council were to sanction Poland for controversial reforms to its judicial system.
Aggregating the probabilities that Superforecasters assign to such specific questions can offer early warnings about the deeper geopolitical trends underway. Economists and financial analysts often use the same technique, known as a "diffusion index," to achieve similar goals, such as spotting inflection points in the business cycle and evaluating the breadth of change in securities prices. In fact, the power of the diffusion index is its focus on change: It tells you, in advance, of the troubles or opportunities that lie ahead.
With this concept in mind, Good Judgment merged its research on clustering groups of questions with the diffusion index model to create a brand new framework for analysis: the Future of Europe Index.
The index works like this: It compares the aggregate forecast for each question in the index with where it was the month prior. The resulting index value reflects the proportion of forecasts that suggest European unity is increasing. A value of 100 means that all forecasts favoring unity are higher, or considered more likely, this month than they were last month. A value of -100, on the other hand, means that all forecasts favoring unity have fallen, or are considered less likely. A reading of zero is neutral, showing that the forecasts have undergone no net change since the previous month.
At the beginning of last year, the Future of Europe Index dropped as European unity came under strain ahead of France's presidential election in April. Though Superforecasters considered the likelihood of a victory for far-right candidate Marine Le Pen to be low, their assessments climbed to 26 percent throughout the campaign season. As the probability of a win for the Euroskeptic candidate rose, the prospects for European unity dimmed.
But the tides turned in March as Le Pen's centrist rival, Emmanuel Macron, gained ground in the polls. Le Pen's loss in the first round of the presidential election nudged the index's value higher still, setting the stage for a period of relative stability on the Continent — and for the Future of Europe.
The index then stayed fairly stable throughout the summer months. Autumn, however, brought new bellwethers of stress for the Continent's cohesion, including Catalonia's preparations for an independence referendum in October. As the regional government in Barcelona pressed forward with the vote despite vigorious opposition from Madrid, Superforecasters increasingly considered the referendum likely to happen.
In recent weeks, the Future of Europe Index has dipped back down into negative territory. Italy's approaching general election, set for March 4, has become a pivotal issue in the index since the political winds have favored the anti-establishment Five Star Movement and its campaign to revisit the country's relationship with the eurozone. Over the past few months, Superforecasters have steadily ratcheted up their estimates of the party's chances for clinching the most seats in the next Italian government — putting downward pressure on the prospects for European unity.
Though each of these case studies focuses on electoral outcomes, the Future of Europe Index contains a wider cross-section of questions that cumulatively monitor the amount of strain on Continental unity. Superforecasters have likewise tempered their predictions that the European Union will gain a new member in the near future, that Sweden's centrist parties will be able to contain the populist Sweden Democrats, and that the European Parliament will adopt a new bank deposit insurance plan. These adjustments bode ill for the European project, as does German Chancellor Angela Merkel's protracted struggle to form a new government in Berlin. Even so, on balance the index suggests that the future of Continental unity is getting brighter, however bumpy the path may be along the way.
Crowdsourcing: Scanning for New Risks
Professional Superforecasters are constantly on the lookout for new information, fresh perspectives and potential risk factors that challenge their views. This robust dialogue, which takes place every day on Good Judgment's internal forecasting platform, is a critical source of inspiration for new forecast questions that complements input from clients and subject matter experts such as Stratfor analysts.
We would like to widen this dialogue even further by inviting Stratfor readers to recommend questions you think we should add to the Future of Europe Index. You can also find the latest report on the index's value on Good Judgment's website, along with a more in-depth look at the current questions contributing to the forecast.
On balance the index suggests that the Continent is heading toward integration, however bumpy the path may be along the way.
Improve Your Own Forecasting Skills
Not everyone is a Superforecaster, but we can all improve our forecasting skills through training, practice and feedback. And for Stratfor readers who are interested in joining the fray, we offer you two opportunities.
First, we welcome you to join our public forecasting tournament, Good Judgment Open. There you'll find a rich variety of questions about politics, finance and popular culture that you can use to practice the principles of Superforecasting. You'll also become part of a pipeline for identifying and cultivating new Superforecasters.
Second, Stratfor readers who missed out on Good Judgment's first government-funded research project will have another shot with the Hybrid Forecasting Competition. The project aims to use a combination of human and artifical intelligence to push the frontiers of forecasting. The first round of the tournament will begin soon, so register now to reserve your spot.
These are exciting times for forecasters around the globe. New, scientifically validated techniques have dramatically improved our ability to predict the future with greater accuracy, and more innovations are on the way. With these tools in hand, we can all be better equipped to filter out the noise in today's headlines and listen for the true signals of what lies ahead.