Over breakfast the other day my five-year-old son Jack posed me an interesting question. “Dad, one day can we eat cake in the bath?”
I proudly second-guessed his motive; he quite likes having a bath and he definitely likes cake, so he had sorted a combo deal that would extract maximum pleasure for himself during bath time, provided of course that the soap and the cake could be kept apart.
Jack’s cake/bath combo seemed an inspired way to relax as I’d spent some of the previous day looking at the latest tourism forecasts for New Zealand through to 2016, which is only slightly less painful than sticking pins in your eyes.
Tourism forecasting is a bit like weather forecasting– a very inexact science. It has always fascinated me that there must be teams of research boffins in a secret basement of the Ministry of Economic Development crunching Gross Domestic Product and foreign exchange numbers from New Zealand’s tourism source markets and predicting the future.
Our tourism industry is worth around $23 billion per annum to the country, so the way in which the researchers arrive at the forecast figures is important and needed further investigation.
Unfortunately my inquisitiveness took me to a detailed document on the methodology of how the numbers are arrived at.
I knew I was out of my depth when early on it explained: “Where necessary we also introduced time-series elements, such as autoregressive terms, to account for serial correlation in the short-run deviations of the dependent variable from estimated long-run relationships with the relevant independent variables.” I was slightly reassured when I saw that they also performed “Augmented Dickey Fuller” tests. I’m going to start running these myself as they sound like fun.
Then I spotted a ray of hope. I noticed that after the numbers spit out of the super computer, they run them past a panel of tourism industry experts called the “Delphi Group” to make sure they are on the right track. Delphi I know something about, as I have been there. Greek God Zeus released two eagles from each end of the earth, and Delphi is where they collided and fell to earth marking the centre of the ancient universe.
Delphi is most famous for its soothsayer the Oracle, who would fall into a delirious, mouth-frothing trance and advise kings and generals of several cryptic options for their future.
For me, there is massive reassurance in knowing that forecasting methods haven’t really changed in 3000 years.
The tourism forecasts make interesting reading. In a nutshell, there will be huge growth from the Asian markets over the next five years and little growth from our traditional “Western” markets. Predictable really – and anyone who ran a few Augmented Dickey Fuller tests would reach much the same conclusion.
Oh, and I cleared up with Jack the real reason why he wanted to eat cake in the bath: “Because the Cat in the Hat does it”. Now that’s a good reason to do anything – no Augmented Dickey Fuller test required.
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