Penn State Co-Hosts U.K. Conference On Weather, Risk, And Decision Making

UNIVERSITY PARK, PA (May 29, 2007) – Leading meteorologists and risk and decision-making scholars will gather next month in England to discuss the integration of risk management and weather forecasting at a conference organized by Penn State, the United Kingdom Meteorological Office, and the University of Exeter. 

"Meteorology Meets Social Science: Risk, Forecast and Decision" will be held June 6 to 8 at the Met Office in Exeter, England.

The aim of the workshop is to be an exchange of ideas between meteorologists and social scientists. Meteorologists will gain insight into the best way to combine and convey their forecasts and include information about uncertainty. Decision scientists and economists will be introduced to a rich test bed concerning decision making and scientific forecasting.

Weather forecasts are one of the most visible and commonly used types of scientific forecast, yet the vast majority of them provide little in the way of precise information about forecast uncertainty. Scholars attending this conference hope to identify an effective way to aggregate and disseminate this information, which could be of great value to decision makers. 

Several of the participating economists are involved in the application of prediction markets to aggregate information from groups. One such project is the weather prediction markets experiment currently underway at the Laboratory for Economics Management and Auctions at Penn State's Smeal College of Business.

Under the direction of Anthony Kwasnica, associate professor of business economics at Smeal, about 60 participants in this experiment use allotted funds to bet on what they believe the high and low temperatures will be in different U.S. cities on a given day. As the going rates for various temperatures fluctuate within the market, the researchers can weigh the market's confidence in what temperatures will be reached.

During the conference in England, economists plan to use similar markets to determine the chance that this summer will be a record-breaker for the U.K.

Additionally, a new experimental online market to predict the North Atlantic Oscillation (NAO) will also be unveiled at the meeting. This market will aggregate the opinions of seasonal forecasting experts around the World to produce predictions of the "NAO index" for this winter. The NAO index is a measure of the strength of westerly winds in the North Atlantic region. Strong westerly flow tends to give Northern Europe milder but wetter winters, whereas weaker flow is associated with colder and drier winters. The wintertime value of the NAO index is of interest to sectors of the economy such as agriculture and energy.

In addition to Kwasnica, the Penn State contingent at the conference will consist of Gary Bolton, professor of business economics at Smeal, and Andrew Kleit, professor of energy and environmental economics in the College of Earth and Mineral Sciences.

Invited speakers include leading academics in economics, meteorology, and psychology from Canada, Israel, the United Kingdom, and the United States.

Funding for this conference has been provided by the U.K. Economic and Social Research Council and the U.S. National Science Foundation.

For more information, visit people.ex.ac.uk/trkaplan/met/conference.html.

To learn more about the prediction markets experiment at Smeal, visit www.smeal.psu.edu/news/releases/mar07/weather.html.