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Why Do We Rely on Judgment When Analytics Outperforms it?
In the late 1960s and early 1970s, Kahneman and Tversky carried out a series of breakthrough studies that gave rise to the field of behavioral economics, and changed how judgment should be viewed. Few of us are aware of the significance of Kahneman and Tversky’s findings, namely that human judgment is flawed and, in terms of making predictions about the future, mathematics tends to outperform human judgment close to 100 percent of the time. They used data and analytics to find true patterns in human behavior that replace false assumptions in a number of areas of study. Similarly, demand analysts and planners need to find the true patterns in human judgment to replace the false ones that govern our demand forecasts and plans.