There seemed to be a time in the not too distant past when all of the above were considered serious tools within commerce, economics and socioeconomics, my metaphoric pen also hovers over but does not settle on politics. I really can’t see a time when politicians of any shape or colour seriously considered data in a practical or useful way.
There have been so many occasions within the last ten years, when most forms of data analysis seemed to be so far from reality, to be downright irresponsible .
Let’s take a quick look at polling. With the recent general elections and the referendum, even up to the very last minute , most were way off beam. Does it matter a lot ? Surely the result is of paramount importance? Yes, it is but inaccurate and deceptive polling can and does have a huge impacts on voters behaviour. Why does this happen? I don’t know but I can hazard a couple of guesses. Good research organisations have highly sophisticated systems and models to determine the accuracy of their polls. When it comes to deciding whether a consumer likes cornflake A or cornflake B, I am sure it works. However, we have a very different voter to that of twenty years ago. First and foremost, I am not convinced that a great lump of our society is happy being truthful to a stranger, in person, on the phone or online, about their political intentions. Secondly, many surveys use pathetically small samples. How is a sample of 1145 out of a voting population of 45 million going to show you anything useful and I don’t care what the pollsters say about sampling techniques, common sense says ‘it don’t ‘.
Forecasts, and I am not including weather, have become the daily diet of most political, economic and financial commentators. IMF, OECD, UN, FT, European Banking Authority, Bank of England, the list is endless and so are the reports. Yet , certainly since 2007, most are wrong or at very least inaccurate. Does it matter a lot? ‘Cors it flipping does !’ Much of what occurs in our daily lives is driven by the reactions to these forecasts. You would be right to question how I know whether they are are right or wrong. It is maybe oversimplifying the answer, however, generally these organisations come up with different forecasts for the same situation( or similar, as if you dig deeper these variant forecasts are often constructed from different data constructs) Assuming there is only one correct forecast, all the rest must be wrong .
What is more worrying, is that two weeks ago, that most eminent and independent of U.K. bodies, the ‘ Bank of England ‘,declared that they were going to ignore some of the data they have been using as it didn’t have a ‘useful’ impact on the results. Well what does that say about all the previous forecasts they have made including that ‘data ‘.
What is,even, more terrifying, is that this week, we have our very own real King Kong let loose on the currency markets. Zilla, short for Godzilla, a software algorithm used by a currency trading platform unleashed its power on sterling. Just writing the words of the last sentence is scary. Godzilla, algorithm, trading platform, and sterling don’t seem like a good mix.
In mathematics and computer science, an algorithm (Listeni/ˈælɡərɪðəm/ al-gə-ri-dhəm) is a self-contained step-by-step set of operations to be performed. Algorithms perform calculation, data processing, and/or automated reasoning tasks.
Well knock me down with a feather stick, if nobody else in the world has any clue as to the data, rules or patterns of sterling over the coming months and years , what data and patterns has the crafty Godzilla managed to accrue to enable it to knock 6% off the value of sterling , when the actual data (as opposed to guesses, assumptions and if’s, buts and maybe’s) available would probably suggest a different reaction.Very scary !
I am really struggling not use obscene words as adjectives. As a confirmed capitalist I find the current use and misuse of data and information, obscene for many reasons but not least because it gives some genuine vent to the spleen of anti capitalists and anarchists. There are those who benefit from this ‘misinformation ‘ , and benefit handsomely. Hedge funds, spread betters, shorters, and various other market manipulators, appear to only exist so that they can profit from whatever the markets do, up or down,ignoring any harmful effects it may have on the accompanying economies and their relevant societies.
In a time when we have access to vast amounts of data, and highly sophisticated technologies to analyse this data, we would rightly assume more accurate forecasts and predictions, and there useage, thereof. Whereas the opposite appears to be true. Perhaps , the fault lies not with the forecasts but with our management of our expectations .