On the utility of population forecasts

Many customers demand population forecasts, particularly for small areas. Although the forecast evaluation literature is extensive, it is dominated by a focus on accuracy. We go beyond accuracy by examining the concept of forecast utility in an evaluation of a sample of 2,709 counties and census tracts. We find that forecasters provide "value-added" knowledge for areas experiencing rapid change or areas with relatively large populations. For other areas, reduced value is more common than added value. Our results suggest that new forecasting strategies and methods such as composite modeling may substantially improve forecast utility.