In the business world, forecasting models need to be both scientifically valid and ‘face valid.’ The former is necessary, but not sufficient by itself. A model must be face valid so that decision-makers do not dismiss it immediately as totally irrelevant. If a model, however, is only face valid, and even if everyone agrees it is reasonable, it might lead to dire consequences. It might become a Weapon of Mass Destruction (WMD) as discussed in Dr. Cathy O’Neil’s book “Weapons of Math Destruction: How Big Data Increases Inequality and Threatens Democracy.” This column discusses some examples from it, why all forecasters should read it, and why managers should take lessons from it.

From Issue: Demand Forecasting in the Cloud: Modern Computing Meets the Forecasting Discipline
(Fall 2018)