Human judgments in New York state sales and use tax forecasting

Abstract

Human judgments have become quite important in revenue forecasting processes. This paper centres on human judgments in New York state sales and use tax by examining the actual practices of information integration. Based on the social judgment theory (i.e., the lens model), a judgment analysis exercise was designed and administered to a person from each agency (the Division of the Budget, Assembly Ways and Means Committee Majority and Minority, and the Senate Finance Committee) to understand how information integration is processed among different agencies. The results of the judgment analysis exercise indicated that revenue forecasters put different weight on cues. And, in terms of relative and subjective weights, the cues were used differently, although they were presented with the same information. Copyright © 2004 John Wiley & Sons, Ltd.

Are Education Cost Functions Ready for Prime Time? An Examination of Their Validity and Reliability

“…Some states set up a council of economic advisers, others rely on university experts, and a large number of states produce their forecasts using econometric methods. While state revenue forecasts by state agencies are influenced by politics (Bretschneider, Gorr, Grizzle, & Klay, 1989), they are informed by technical forecasts developed using a variety of methods (Kuo & Liang, 2004;Mocan & Azad, 1995;Shkurti, 1990).…”

Determinants of linear judgment: A meta-analysis of lens model studies.

“…We excluded from consideration experimental reports that did not model the environmental side of the lens, that is, for which criterion data were missing (e.g., Kuo & Liang, 2004), research within the conflict resolution paradigm in which the criterion for one person is the judgment of others (e.g., Hammond, Wilkins, & Todd, 1966), and studies in which the unit of analysis was aggregate (typically mean), as opposed to individual, judgments (e.g., Gifford, 1994). We note, parenthetically, that whereas there are numerous studies of the last category (especially in social psychology), they are quite contrary to the Brunswikian tradition in that they confuse idiographic (within-individual) and nomothetic (within-group) levels of inference.…”

Coordinating judgmental forecasting: Coping with intentional biases

“…Yaniv [89] fully ascribes biases to incentives and concludes that forecasting behavior differs substantially between departments with regard to financial incentives. By contrast, Kuo and Liang [42] highlight the importance of roles, and conclude that departmental roles affect forecasting behavior, even when forecasters receive exactly the same information and have no role-specific incentives or interests. Also participants in a study by Önkal et al [64] displayed a strong commitment to their cross-functional roles.…”

“…Still, departmental roles, even when unconnected to rewards or penalties, can affect intentional biases, by implying goals. As prior research shows that heterogeneous departmental roles and incentives may cause unintentional biases [42,64,89] , we hypothesize that both may also cause intentional biases and can substantially impact performance. Hypothesis 1.…”

“…Sales representatives may prefer to maintain high levels of inventory so as to be readily capable to respond to yet unforeseen sales peaks; operations personnel may feel more confident with lower inventory levels justified by historical data [58,62,70] . These opposing interests may lead to differentially contextualized inflated or deflated forecasts [42,64] . Departmental roles and incentives, therefore, clearly provide context for intentional as well as unintentional biases in demand forecasting.…”