The perils of leaning too much on metrics and numbers

The perils of the all too common practice of “management and decision making by numbers“, a favorite practice of the Empty Suits with an MBA,  has been  clearly demonstrated by PhD student Thomas Herndon, who discovered a serious calculation flaw in the very influencial macro-financial paper by professors Rogoff and Reinhart, a paper which has been the basis for financial decision making for many governments world wide.

It’s unfortunately way too common for most economists to prefer a beautiful mathematical model to the messy reality, to prefer the “map” before the reality.

(for my Swedish speaking readers, there’s an excellent post in Svenska Dagbladet by Andreas Cervenka,  an article by Hanna Östberg in the same paper, an editorial by Peter Wolodarski in Dagens Nyheter, an article by Anders Bolling in DN,  and a slightly different perspective “from the left corner” by Katrine Kielos in Aftonbladet, all on the Rogoff/Reinhart affair) 

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About swdevperestroika

High tech industry veteran, avid hacker reluctantly transformed to mgmt consultant.
This entry was posted in Business, Complex Systems, Finance, Leadership, Math and tagged , , , . Bookmark the permalink.

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