Note that this design flaw is intentional. The trade organization has no interest in being accurate; instead, its goal is to promote a sense of excitement to the benefit of the shopping malls and retailers who are members of the NRF. Hence, the survey's bias is to be unidirectionally inaccurate -- that is, overly optimistic. (There was one exception: 2009, after the financial crisis, when the surveys revealed that people were scared -- but not as scared as they said they were, so the survey was way too pessimistic.)
Normally, a trade organization hyping the interests of its members is unremarkable. What makes the annual forecasts relatively unique is the way the financial news media blithely parrots the useless information the NRF peddles. Outlets that should know better are guilty as charged.
There is a broader discussion to be had about why we are so easily fooled into believing things that are patently untrue, in this case a report that we know is deeply flawed and unreliable. Yes, it’s bad math, biased science and whatever else you want to call it. But it points to deeper issues that affect all of us, whether we're investors, consumers or voters. Simply put: Why are we so enamored of, and swayed by, junk content?
It’s a complicated question. Motivated reasoning is a key for those who produce dubious information; for consumers of junk content, a combination of wishful thinking and confirmation bias explains a lot. A longer answer would be the stuff of a doctoral thesis.
The bottom line remains: When we cling to hype instead of data, we invite investing -- and policy -- foolishness at best, disaster at worst.
This column was provided by Bloomberg News.