When is it acceptable for the Social Security Administration to bias today’s forecast towards yesterday’s forecast, producing artificially smooth forecasts over time?

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Smoothing in this way can be advantageous statistically to reduce variance, and possibly mean square error if there exists no systematic bias. Unfortunately, SSA forecasts are systematically biased and so smoothing is not helpful here. Another possibility is to protect the public so that it does not worry about the future of Social Security. Whether this paternalistic position is appropriate is a normative choice of course. Our own view is that, whenever possible, the government should be in the position of giving accurate forecasts and telling the public the truth as soon as they know it. The government can and should accompany point estimates with accurate uncertainty estimates. If public officials or the public do not understand these uncertainty estimates, then it is incumbent upon government officials, and those of us who pay attention to what they do, to be good teachers. Politicians and the public may not have the time to deal with the details very often, but in our experience it is not difficult to convey important points like these.