Behind the numbers: Spears Business researchers use econometric forecasting model to guide state agencies

Behind the numbers: Spears Business researchers use econometric forecasting model to guide state agencies

Thursday, November 13, 2025

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Forecasts guide our everyday choices.

Is it necessary to grab an umbrella? Is it better to pack a light jacket or a heavy coat? Which day next week is ideal for scheduling an outdoor event?

In any scenario, Drs. Hongbo Wang and Dan Rickman know the importance of making informed predictions rather than wild guesses.

That's because their forecasts involve billions of dollars impacting the entire state.

The Spears School of Business is home to the Oklahoma State Econometric Model, the state's only large-scale econometric forecasting model at a public university.

Rickman and Wang, who run Oklahoma State University's Center for Applied Economic Research, use the computer-based statistical model to create in-depth economic forecasts that guide government agencies and chambers of commerce in Oklahoma.

The researchers meet with the Oklahoma Tax Commission and Oklahoma State Board of Equalization, presenting data that informs budgetary decision-making. OSU is one of two entities in the state - and the only university - contracted to prepare annual economic forecasts for the OTC, which references both to create its unique forecast.

Although Wang and Rickman can't tell the state government how to build its annual budget, their work is a reliable resource. They combine historical data, national data and professional judgment to enlighten the public about Oklahoma's economic trends and prepare for fluctuations.

CAER director Dr. Hongbo Wang earned her Spears Business Ph.D. in 2015.

"Whether you're doing business or you make a policy or you're handling your personal life, you do not want to get a shock," Wang said. "When that thing has already happened, then you do not know how to handle it. You want to see what's in front and what's coming to you."

Spears Business has extensive experience in this area.

Although the econometric model has evolved, its concept traces back to the 1970s. By the time Rickman arrived as a full professor in 1996, economic forecasting was well-established at OSU. The Regents Professor of Economics has shaped CAER in its current form since 2011, and he led a previous version from 1997-2004.

Wang started her CAER journey as a research assistant while pursuing her Ph.D. in economics. After graduating in 2015, she stayed with the center, where she is now the director.

Wang and Rickman forecast employment for about 35 Oklahoma industries. They also focus on five major tax revenue sources: personal income tax, corporate income tax, sales tax, use tax and motor vehicle tax collections.

"The tax revenue is going to depend on the amount of economic activity in the state, so you first start by trying to predict what's going on in the economy," Rickman said. "We do that at the basic level, trying to build up from the parts to the whole, and then use that to project what's going on with tax revenues."

Since 1996, Dr. Dan Rickman has helped shape OSU's economics education.

The researchers analyze economic data from 1998 through the most recently available time period. The past often indicates future trends, but it doesn't tell the whole story. Rickman and Wang must monitor current events and consider the specific effects on Oklahoma.

During the COVID-19 lockdown in 2020, the researchers had little time to rest. The economic uncertainty surrounding the pandemic made forecasting more complicated than before.

Today, ever-changing factors such as tariffs leave national forecasts in constant flux. Rickman said he tries to predict what national forecasters will do so he can anticipate the impact on Oklahoma.

"We have to do a lot behind those numbers," Wang said. "We have to follow all the national news and Oklahoma news so that we can make our own judgment about what's going to happen. A lot of the thinking will combine with your professional judgment, whether you understand this industry, whether you understand the economy locally."

Wang and Rickman use their expertise to establish trust with government leaders, business leaders and the public. The econometric model produces numbers, but it doesn't explain why. The researchers dig into the data and communicate with their audiences, making summarized economic outlook reports publicly available on the Spears Business website.

"You have to have a scenario put together that's cohesive that says, 'This is how it all fits together, and here's what's driving everything and the results that you're getting,'" Rickman said.

Typically, Rickman and Wang meet with the OTC once in the fall before meeting with the Oklahoma State Board of Equalization. Then, in January or February, they present updated forecasts to both entities.

This is no small matter. The OTC annually collects more than $11 billion dispensed across more than 200 state agencies, funds and programs, according to its website. The Board of Equalization plays a role in tax administration and approximates the amount of revenue available to the Oklahoma Legislature in each upcoming fiscal year.

Rickman and Wang teach in the Department of Economics, where their applied research influences their courses. Rickman, who holds the OG&E Chair in Regional Economic Analysis, shows his classes how to create economic forecasts with computer-based software.

You don't want to get caught in a storm without an umbrella, so an accurate forecast helps.

Similarly, Wang and Rickman strive for their economic forecasts to guide the development of stable budgets.

"If you budget for really optimistic growth and it turns out not to be the case, then you have to go through massive cutbacks in budgets mid-year," Rickman said. "So, the more accurate that you can get a revenue forecast, the more stable will be your government services and pricing."

Story by: Hallie Hart | Discover@Spears Magazine
Photos by: Piper Reese, OSU file photo