Year: 2011
Type: report
Abstract: Since 1973 forecasts of future energy consumption in the United States have fallen dramatically.Forecasts of consumption in 1985 made as recently as 1974 were too high by nearly a factor of two.Forecasts for consumption in 2000 have fallen by a similar ratio over the same period.This paper tests the ability of adaptive expectations and univariate trend extrapolation to explain the history of energy demand forecasts.A behavioral model of the trend estimation and forecasting process is developed.Energy demand is forecast by extrapolation of the expected growth rate of consumption.The expected growth rate is determined by the past rate of growth of actual energy consumption.The model explicitly considers delays in the measurement of energy consumption and in individual and organizational response to changes in the apparent trend.The model is shown to fit the forecast data well for three different forecast horizons.Univariate trend extrapolation and adaptive expectations thus account well for significant evolution of energy demand forecasts during a major period of change in energy consumption.The results are reconciled with the fact that many of the forecasts in the sample were based on complex models and were plainly not simple extrapolations, and implications for behavioral modeling of expectation formation are discussed.
Author: John D. Sterman
Institution: Massachusetts Institute of Technology
Language: English
Field: Decision Sciences
Domain: Social Sciences
SDG: Climate action
Open Access status: green
OpenAlex ID: W1575019131