Posts filed under “Bad Math”
We live in an era of technological advancement. Whether it’s genomics, nanotechnology or software algorithms, the world is driven by mathematical solutions to complex problems.
Yet at the same time, we are surrounded by what I like to call Bad Math. It seems as if the average person has little familiarity with the fundamental workings of mathematics. Statistical errors are rife. Even the classic error of confusing correlation with causation seems to be impossible to vanquish.
Some of the blame for this lays in our education system. We teach by rote, instead of explaining critical reasoning and analysis. Instead of teaching children what to think, we should be teaching them how to think. It is a fundamental failure of our education system.
Which brings us to today’s subject.
As you might imagine from a review of any of our morning reads, I plow through a lot of media, much of it good, some of it excellent. What you don’t see linked are the poorly reasoned, statistically amateurish, logically defective articles that don’t make the cut. Too many writers seem to have a dominant right hemisphere. While that may be great for creativity and language skills, it means they are deficient in logic, numbers and analysis.
Perhaps a few examples might help to explain my ire.
“We are in the business of making mistakes. The only difference between the winners and the losers is that the winners make small mistakes, while the losers make big mistakes.” -Ned Davis I began my career in finance on a trading desk. You learn some things very early on in that sort of…Read More
I am a fan of Morgan Housel, columnist at the Motley Fool. His writings evince a strong understanding of behavioral issues, and he has a gift of sifting through the nonsense to get to what really matters. Only on rare occasions do I get to disagree with him. Today is one of those times. Housel has…Read More
Last week, we discussed the problems with having poor reading comprehension and the impact that has on consuming news. This week, I want to look at the lack of math skills. America seems to becoming a dangerously innumerate society. Innumeracy is incompetence with numbers rather than words. This is a worrisome issue for the future…Read More
From Betsey Stevenson & Justin Wolfers, a short primer on separating lies from statistics: 1. Focus on how robust a finding is, meaning that different ways of looking at the evidence point to the same conclusion. Do the same patterns repeat in many data sets, in different countries, industries or eras? 2. Results that…Read More
This column is not about working too hard, or the dangers of high cholesterol, or lack of exercise. It is about a rash of suicides within the financial community. What this actually means is less certain than the reporting on it might imply. Yesterday, 47-year-old Edmund Reilly, a trader at the Vertical Group, jumped in…Read More
Category: Bad Math
Five years ago today, I made the luckiest market call of my career. A few details and some context first, than an explanation as to why this was so lucky. In 2005, I knew something was amiss in the global markets. The various metrics we track showed that credit had become a full on bubble,…Read More
One of the things that baffles me about people is how they completely misunderstand risk. Lots of my friends panic about things that have no real chance of killing them, but ignore the things that will. This can lead us to make irrational decisions, and sometimes irrational policy. What really will kill us? Watch and learn.
What Kills Us? How We Understand Risk.