An empirical analysis of the effect of length of forecast horizon on population forecast errors.

Many studies have found that population forecast errors generally increase with the length of the forecast horizon, but none have examined this relationship in detail. Do errors grow linearly, exponentially, or in some other manner as the forecast horizon becomes longer? Does the error-horizon relationship differ by forecasting technique, launch year, size of place, or rate of growth? Do alternative measures of error make a difference? In this article we address these questions using two simple forecasting techniques and population data from 1900 to 1980 for states in the United States. We find that in most instances there is a linear or nearly linear relationship between forecast accuracy and the length of the forecast horizon, but no consistent relationship between bias and the length of the horizon. We believe that these results provide useful information regarding the nature of population forecast errors.