Living by the numbers

Statistics are everywhere now, changing the way we do business, and in some cases, making us obsessed with numbers

Keeping score in business is easy. Count the till at the end of the day, and of course businesses of any size have monthly, quarterly, and yearly financial statements prepared. Wall Street is a massive industry mostly devoted to number crunching and analyzing. Analysts estimate quarterly earnings for publicly-traded companies. Hits and misses turn into dollars and cents when earnings news is announced.

Never in the past has there been a way to tally the popularity for articles or books. The New York Times best seller list is based more on how certain retail booksellers feel books are moving rather than hard numbers.

Writers who scribble a column for a local paper think everyone in town is reading their work when just a couple of people they don’t know mention the articles. Receiving a flurry of flattering (or nasty) emails in response to a piece appearing online can fuel a writer’s notions that the whole world is reading.

But now we know. “Numbers and rankings are everywhere,” writes Alina Tugend in The New York Times.

In the journalism world, there’s how many people “like” an article or blog. How many retweeted or e-mailed it? I’ll know, for example, if this column made the “most e-mailed” of the business section. Or of the entire paper. And however briefly, it will matter to me.

Tugend’s brilliant piece makes the point that our lives increasing revolve around credit scores, numerical consumer ratings, test scores and the like. But how these numbers are generated is sometimes suspect.

Today’s younger generation has grown up trusting numbers. “For almost anybody in the United States under the age of 25, the only models are quantifiable rankings,” says Howard Gardner a professor of cognition and education at Harvard Graduate School of Education.

Forget the intangibles, just give us the figures. Much of this is due to the study of economics going from studying human action to a quantitative exercise with the idea that the economy can be managed and outcomes be predicated. However, as F.A. Hayek explained,

such complex phenomena as the market, which depend on the actions of many individuals, all the circumstances which will determine the outcome of a process … will hardly ever be fully known or measurable.

Jonah Lehrer writes on ScienceBlogs that this score keeping creates “the tendency of the social software to quantify our social life.” Since the cost of acquiring and maintaining friends is low in social networking, people connect with as many as possible. Do all these “friends” provide meaningful feedback, interesting links and information that enhance a person’s quality of life, or is it merely a game of “I have more friends than you”?

Lehrer writes,

What I’m most troubled by is the desire of individuals (especially myself) to constantly check up on these numbers, and to accept these measurements as a measure of something meaningful. We’ve taken the natural nebulousness of social interactions – I might know you’re important, but I don’t know how important – and made them explicit. The end result is that our online relationships are shadowed by power relations.

Lehrer wishes there was a social platform that didn’t measure anything, but doesn’t think that will happen.

In the same vein, companies doing business for the long haul, not interested in the day-to-day fluctuations of their stock price, dream of a financial world where the quarter-to-quarter results don’t matter.

In the world of monetary inflation and social denigration, the well-worn phrase “Lies, damned lies, and statistics” applies more than ever.

Making financial decisions to satisfy their “Friends” on “The Street” to generate the immediate positive feedback of higher stock prices is no way to run an enterprise.

At the same time, being fixated on immediate rankings, traffic and “likes” turns creators into the obsessed.

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