: Why is the assumption of normal distribution so prevalent in forecasting? Has it been observed historically ?

Question

I keep seeing this when studying economics but it feels like it cant be true

In: 2

Answer 1

It’s usually not a good idea to *assume* a normal distribution. When you hear someone say “this statistical method assumes the data is normally distributed”, what they actually mean is that the statistical method is only valid and reliable when used on normally distributed data.

so “assume” basically means “We’re assuming you’re not dumb enough to use this method on non-normal data”

So when you use those kinds of statistical methods, you should always start by determining if your data is normally distributed, or not. That way you aren’t *assuming* that it’s normally distributed.