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Economic bias of weather forecasting: a spatial modeling approach

Version 2 2024-06-03, 14:18
Version 1 2015-07-09, 12:29
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posted on 2024-06-03, 14:18 authored by Nejat AnbarciNejat Anbarci, E Floehr, J Lee, JJ Song
The value of accurate weather forecast information is substantial. In this paper we examine competition among forecast providers and its implications for the quality of forecasts. A simple economic model shows that an economic bias geographical inequality in forecast accuracy arises due to the extent of the market. Using the unique data on daily high temperature forecasts for 704 U.S. cities, we find that forecast accuracy increases with population and income. Furthermore, the economic bias gets larger when the day of forecasting is closer to the target day; i.e. when people are more concerned about the quality of forecasts. The results hold even after we control for location-specific heterogeneity and difficulty of forecasting.

History

Pagination

1-22

Language

eng

Publication classification

CN.1 Other journal article

Publisher

Deakin University, School of Accounting, Economics and Finance

Place of publication

Geelong, Vic.

Series

School Working Paper - Economics Series ; SWP 2008/12

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