In simple terms, this paper tells us that while “the wisdom of crowds” does work for economic forecasts, there is a point of diminishing returns. The initial few forecasts bring large improvements in accuracy, but adding more forecasts beyond that point yields only small gains. The equicorrelation model not only provides a clear explanation for this phenomenon but also confirms that averaging forecasts equally is nearly the best approach. This work has important implications for how economic forecasting surveys might be organized in the future.

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