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Here we discuss two types of widespread analytic handicaps: individuals affected by poor analytics, committing financial suicide but impacting very few people, and government or corporate analytic failure negatively impacting millions of people.
Case #1: Public Disaster
Here are a few examples that illustrate the consequences of bad analytics made by government or corporate entities:
Case #2: Financial Suicide
These are examples of individuals (entrepreneurs) killing themselves through terrible analytics:
In the case of Walla Walla, we won't come back. In the case of the Snoqualmie Ridge restaurant, we ended up eating at home, and we won't come back. This represents several thousand of dollars that we want to spend but will probably be never spent (we'll spend more time vacationing and eating at home instead). So it does have a negative impact on the economy: people don't spend not because they don't want to spend, but because spending your money comes with such big and absurd problems, caused by analytically-challenged decision makers. I'm sure many executives managing corporate budgets think along the same lines.
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Another example of reckless analytics is the housing bubble. All the people who bought houses that they could not afford, and failed to predict that the bubble was about to burst (a level 1 prediction, that is a very easy one). You can say that the banks were the crooks, but no buyers were ever forced to buy a house at insane prices. Smart buyers have not been financially wiped out - indeed I made some good money in the real estate thanks to smart timing, between 2005 and 2012.
I bought a house in a bubble-free market in WA after selling my house in CA for $575k (we bought it for $270k four years earlier, it is now worth $230k). The WA mortgage agent was very unhappy that we did not buy a $1MM house in WA and just settled for a $600k home (now worth $650k). But they did a mistake when filing the papers: they applied an interest rate for a 15 year mortgage but issued a 30 year mortgage as requested. No way it was an error, this must have been an attempt to steal money from us. Just looking at the terms (without even using a pocket calculator), I politely said "there is no way this is a 5.85% interest rate". They changed all the paperwork and we came back to sign the corrected paperwork a few days later. Without me noticing the "mistake", these crooks would have stolen more than $100k from us over the course of the mortgage. I'm sure plenty of buyers have been robbed this way, are still being robbed now and don't even know about it, because they lack analytical skills.
I was attracted to read this post because of the title. But I'm sad to say that I feel the analysis was very shallow and somewhat motivated by some frustration in your neighborhood. Your experience in a specific situation shouldn't be generalized, we need facts. I'm sorry, I don't want to make any lesson to you. You're far more competent than me, but I'm not convinced by this post.
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