Can Narrative-Based Scenarios Support Quantitative Judgmental Forecasting?

Abstract

Narrative-based scenario planning and forecasting are often regarded as distinct methods for informing decisions subject to risk and uncertainty. This paper compares the approaches and explores the extent to which narrative scenarios can enhance quantitative judgmental forecasts. It argues that scenarios can provide a transparent rationale and context for forecasts, thereby increasing their acceptability. While there is little extant evidence that scenarios can be effective in mitigating judgmental biases in forecasting, this may result from the abbreviated form of the scenarios provided and the non-involvement of forecasters in their development. However, the integration of quantitative forecasting models with scenarios can enhance the former's value—by exposing inconsistencies and discrepancies that may require resolution, and revealing underlying forecast assumptions that need to be both appreciated and monitored.