Saturday, December 20, 2008

Data Miners of the World, Unite

Asked about the paucity of statistics while he was implementing the policies that turned postwar Hong Kong into a thriving global financial centre, John Cowperthwaite replied: if I let them compute statistics, they’ll want to use them for (scenario) planning. Asked about some of the measures he would advocate for a turnaround, Nassim "Black Swan" Taleb replied: I don’t like scenario planning, because people don’t think out of the box. I would also ban the use of statistics because unless you know statistics very, very well, it’s a dangerous, double-edged sword.

In one of his latest posts, Sanjay demonstrates how per capita shrinks with a sinking rupee. Statistics are always relative. They depend on the elements factored in their computation, and these are never constant. That's why dogmas such as 1)VAT reduction automatically boosts consumption, 2) exchange rates invariably affect imports and exports and 3) PRB provision is systematically inflationary are all flawed.

As a matter of fact, we do not need statistics that feed trite debates and provide a smokescreen to incompetence. We nevertheless need them to decipher patterns and measure supply and demand to reduce inadequacies and improve flow everywhere.

1 comment:

Sanjay Jagatsingh said...

Se sirman en ekutan diskur Cowperthwaite ki Chairman MK ek so CEO fine met kompagni la teknikman en bankrut. Me mo sipoze u pa bizin poz ban bon kestyons kan oune sorti dan la kwiss zipiter.

Ban leress mortel kav lire sa

E eski nu bizin sirpri kan nu trouv Friedman p sant louanz Cowperthwaite?