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You Don’t Know if That is a Big Number

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1 Response

  1. Ken says:

    Nate wrote: >>The truth of the matter, I suspect, is that the pundits and politicians have no idea whether or not business X is profitable. Scarier still, they probably have no idea that they have no idea how profitable business X is. It really bugs me.>>

    And it should bug us all.

    By a remarkable coincidence, just this morning I found this link on my other favorite blog, Marginal Revolution (economics stuff): http://sports.espn.go.com/espn/page2/story?page=simmons/100402

    This is Bill Simmons’ article on ESPN describing his late arrival to the world of Sabermetrics, which is the attempt to apply quantitative methods to better understanding of baseball. “Traditional” fans have railed against it, but the simple fact is that calculating batting average and counting RBI’s just isn’t enough.

    In the realm of economics, and particularly in evaluation of corporate performance, there is a seemingly endless proliferation of quantitative methods. Unlike baseball, where the sophisticated methods seem to be known only to a limited circle of “stathead geeks,” in economics the concepts, the computations, and the results, are all widely known and widely used.

    It’s only the “traditional fans” (i.e., the ones too lazy to learn what’s happening) who still cling to the oversimplifications. And it’s lame that the news media and the politicians are the ones most firmly planted in that “community of ignorance.”