I just watched the opening match of the football World Cup between Brazil and Croatia. The model I helped develop with my colleagues in Danske Bank forecasted that Brazil would win by two goals. The model turned out to be right – Brazil won 3-1.
For the football commentators the match was a disappointment. Brazil didn’t play well and the referee seemed to have given a penalty – undeservingly – to Brazil. However, for the economist there was nothing surprising about the outcome.
Our World Cup model told us three things. 1) Brazil was a massive favourite. 2) Brazil’s Neymar would be important (we estimate his importance would be around +0.3 goals per match) and 3) the home-field advantage for Brazil would be +1 goal.
Neymar scored two goal and the home-field was clearly important (the referee was not exactly hostile to Brazil)-
So for now I can say – I told you so.
Luckily football is mostly about chance. So there is a good chance that we will be wrong in the next couple of matches.
PS most football commentators would say that Brazil disappointed and that Brazil therefore is less likely than previously thought. The economist would on the other hand notice that we now know that Brazil actually won today – compared to early were we didn’t know they would win.