# The Wisdom of Your Crowd | DataDrivenInvestor

**Best Use: Increase the accuracy of any forecast.**

In 1906, Francis Galton discovered what we now call, the wisdom of crowds. At a farmers’ fair in Plymouth he came upon a contest where crowd members had to guess the weight of an ox. Around 800 people wrote their guesses on tickets and the person with a guess that came the closest to the actual weight won a prize. The interesting part of this contest was the analysis Galton did afterward. He added up all the weights guessed and took an average. It turned out that the average was remarkably close,It turned out that the average was remarkably close, much closer than the winner, and even closer than some of the experts in the crowd. The average was only one pound off.

This experiment has been repeated many times over the last century. One talked about is the Jelly Bean Experiment. A finance professor, Jack Treynor ran this experiment with his class of fifty six students. He filled a jar with 850 jelly beans and had his students guess. The average estimate was 871 — a difference of only 2.5%. Only one person in the class made a closer guess.

In 2004, James Surowiecki drilled down into this phenomena with his acclaimed book, The Wisdom of Crowds (Doubleday). In his research he discovered important information about the crowds. Not all…