Saturday, 12 December 2009

The Probable –vs- The Possible

Our recent post on climate change and poverty reduction (see post) stimulated a great deal of comment and debate. One of our private correspondents asked an interesting question, one that is worth dwelling on. I was asked if futurists ought to be concerned with probable futures rather than a range of possible futures. Instinctively, I reached for the dogma that says that, as we are uncertain of which of the many alternative future states might come into being, we ought to focus on the range of possible futures rather than concentrate upon a single future, irrespective of how probable that future might be. And yet, as I reached for the party line, a nagging doubt entered into my mind: what do we know about the probable future?

Probability is a funny thing. It looks objective and scientific, it crunches a large volume of numbers, but in reality it is quite fuzzy and subjective. If we look closely at a scientific forecast, then usually an honest one will establish two things – a forecast range and the degree of certainty that is expressed within that range. For example, the Bank of England publishes its economic forecasts that inform the decisions about setting the levels of interest rates. These are quite instructive because they have a range of predictive possibility (the Bank of England calls it a ‘fan’ because it looks like a fan graphically) and a probability of outcome.

Chart 1 of the current economic overview (November 2009 – see review) highlights a forecast for UK GDP growth out to 2012. It is interesting to note that there is a 10% chance that UK GDP will be growing at about 3.0% to 3.5% by 2012. No doubt this has informed the Chancellor in his predictions of GDP growth in the Pre-Budget Report this week. It is also interesting to note that there is a 10% chance that UK GDP growth in 2012 will be in excess of 5%. This is a growth level that the UK has rarely achieved – a once in a century event. There is also a 10% chance that the UK economy will not have come out of recession by 2012, which gives some comfort to the habitual pessimists and opponents of the government.

The same data set, the same ‘scientific evidence’, supports estimates that the UK will experience unprecedented GDP growth rates of over 5%, 'the restoration of ‘normal’ GDP growth rates of 3.0% to 3.5 %, and continued recession, where the GDP growth rate continues to be negative. There is an equal likelihood of each probable outcome. As a futurist, I would counsel to prepare for each possible future because they are all equally as probable. The ‘scientific evidence’ has given rise to three contradictory and mutually exclusive futures that could come into being. What we don’t know is which one will actually prevail.

This uncertainty opens the door to the manipulation of the forecasts. I have already alluded to it in that the core forecast of GDP growth that was contained in the Pre-Budget Report this week was at the upper end of the central forecast. What this means is that the Chancellor has been unduly optimistic in his calculations. But then, he would wouldn’t he? The Chancellor is a politician rather than a technocrat and politics is all about presentation. We shouldn’t be surprised that he has used the best credible figure that supports his case. His opponents would argue differently – some to the point that the UK may stay in recession until 2012. As we head for the General Election next year, the issue will boil down to which politician appears the most trustworthy. Which ‘scenario’ we find the more compelling. It is no accident that the art of story-telling is central to the construction of scenarios, the stock in trade of futurists.

Which brings us back to the original question. It is worth pointing out that the ‘scientific evidence’ establishes three mutually exclusive and equally probable future states. And that is only looking out for 2 years. The science of climate change is far less trustworthy. It is looking out about a century, with all of the hazards that long term forecasting has, it is using less well established models, it is using a restricted data set, and it has all sorts of political interpretations to the evidence. It is no wonder that so many possible future states have been ‘predicted’ by climate science.

For example, global warming could lead to colder winters in the UK, as the melting Arctic ice cap leads to the de-salination of the North Atlantic, thus switching off the Atlantic Conveyor that keeps UK winters unduly warm. Or it could mean that UK winters actually become warmer, wetter, and a lot more stormy as global warming heats the Caribbean in the winter, thus intensifying the Atlantic Conveyor. Both future end states are plausible, both are supported by credible climate models, and both are supported by the data. However, each has a very different policy implication. This is why futurists focus on possibility rather than probability. Probability, when we drill into it, is just not precise enough for policy formulation.

After all this is how we earn our keep - by being useful!


© The European Futures Observatory 2009

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