Numbers and US

Story that numbers tell us

Business sense or data (statistics)

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Couple of weeks back, I was reading an article in Cricinfo by Ed Smith.  In the article, Ed Smith was talking about Alistair cook and captaincy, and made some really good points about our potential bias – alpha male/pro-adventure bias- when we judge quality of captaincy. In addition to making insightful commentary on captaincy and our perceived value of it, he went on to talk about the movie Moneyball and Trouble With the Curve, together. He didn’t comment much on it, but said that Eastwood’s movie is inverse Moneyball. In Moneyball, a computer savvy nerd makes a fool of guys who have been playing/watching the sports for a long time,  where as in Trouble With the Curve, a guy who does not know computer at all, who can’t even see properly, but who has lived and breathed his life in baseball; somehow, at last, comes winner when pitted against a guy who was all data and computer.

Understandably, in a commercial movie, to get the effect, to catch the audience attention, one has to make the story more dramatic than what the underlying idea truly is. A movie won’t sell if someone tries to make  it an intellectual debate about how world works without taking sides or trying to be equitable to all the conflicting ideas.

But, watching these two movies in the context, certainly helps put things in perspective.  And, it enriches the age-old debate of decision making in the  areas of mundane business world as well, not just the fanciful areas of sports. Though, we all know,sports management does not fall outside the realm of business world anymore.

It brings into forefront the age old debate of old vs new, experience vs exuberance, business sense acquired through hard work  on the field vs insights thrown outside from the know-it-all I-god.

Like all things in life when we are faced with two contrasting thoughts, most often than not, the truth lies somewhere in between.  The cliche’ might be true here as well. Or, may we don’t have to think of the two as competing ideas. Both ideas  complement each other, and when put together to work in tandem with each other brings wonder. But over reliance in the one, and putting a blind eye over another might have crumbling effect on business. In fact, if we think deeper we would realize that we can’t do justice to one without directly/indirectly using the other facets of decision making.

So far so good! The problem is, each one of us believes that where we stand, what we think, is ‘somewhere in between’ . We have the right mix  or perfect ingredient for decision making for a particular problem. Sometimes we might not be right!

I get skeptical when I see people going gaga over Moneyball. It’s certainly refreshing to know that an endeavor that looks so ‘personal’ can be understood through impersonal ways of looking at the results. But, to argue, to the extreme, that sports punditry acquired through by being on the sun for thousand of days is worthless, is  farcical.

Conversely, per Trouble with the Curve, we end up meeting folks ( we, ourselves, take these avatar sometime when pitted against a problem that are close to our heart) who don’t value statistics, and consider it a way to cloud the clear judgment.  Statistics or even the most complex algorithm has it’s value, but it’s true, it’s dangerous when we have placed our common sense safely in a cupboard.

Being in a profession of numbers, I am supposed to be biased towards use of numbers for decision making.  Oddly enough, I like it when I hear people saying they don’t have much faith in statistics. Reading between the line, that they really don’t like over-use or over glamorization of statistics, not just statistics. To me, it looks like that it might come when someone has sound intuitive understanding of statistics, and it is just an attempt to be dramatic.  But, it looks like there are some who really think statistics is a waste.

What we are discussing here is complex, and I might have to put more thoughts on it to write it clearly and decisively. But, here are my two cents on why this thought is as outrageous. To start with, statistics is just an extension of common sense.  Events that  we have observed thousand of times, that  we might not be able to recall one by one each  moment we are making a decisions, are condensed into useful wisdom using statistics.  Statistics is just a formalization of common sense where after putting rigorous effort  statisticians have developed methods ( we can call it thumb rules) that helps us make judicious decisions faster with the help of computers. it saves us the rigor of looking at tons of events s at once by super humans – only super humans can do this -, and making a decision based on common sense. And if we put in some effort, it’s not difficult to appreciate common sense behind a complex, impersonal statistical formulation.  Statistics is nothing but common sense made easy.

For example, if someone asks us what is 2*3. We will immediately say that it’s 6. The result makes business sense. if 3 guys give me $2 each, I’m going to be richer by $6. Now, if someone asks us what is 236237 * 978467345, we might get confused. Using calculator and spreadsheet, we can say, it is 231,150,190,180,765.  Now, I might start arguing that I don’t believe this number because I can’t verify it with common sense.

But if we just start relying on the consistent behavior of numbers, we can say that the result might be correct as two numbers that end in 7 and 5, when multiplied  gives a number that ends in 5; then we can go on, and say  231,150,190,180,765  is greater than 200000 * 97000000.  The calculation looks close, may be correct; once again 231,150,190,180,765  is less than 200000 * 100,000000, so it makes sense. Hence the numbers we’re getting from calculator might be correct.

The difference between, a complex statistical result and above big multiplication is  our attitude. In our mind we have developed a way to test big multiplication, so have started relying on machines.

And, if we put some thought and think a little harder, we would start realizing that appreciating  common sense behind a laborious statistical methods is not impossible.

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Written by SK

October 18, 2013 at 6:14 am

Posted in Uncategorized

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