ECONOMIC FORECASTING WITH TANGIBLE AND INTANGIBLE CRITERIA: THE ANALYTIC HIERARCHY PROCESS OF MEASUREMENT AND ITS VALIDATION

This paper provides a summary of a mathematical theory about the use of expert judgments in paired comparisons and how to derive priorities from them particularly when intangible factors are involved. An example to validate the process when applied to tangibles is given along with a simple decision example to determine which city to choose to live that involves several intangible criteria. The paper then deals with three kinds of applications of the process in economics. One is about currency exchange, the second about input-output analysis and the third about forecasting turnaround dates of the US economy in 1992, in 2001 and finally in 2008-2009.

Keywords: Intangibles, analytic hierarchy process (AHP), dollars versus the yen, input-output, forecasting