We are drowning in data.
In sports, The Indiana Department of Education, election polling, and commercial surveys, data is so addictive to consumers that when information is not naturally available, vice presidents of this and that move to create it. When data does not produce a desired result, the goal or the data calculation is changed.
Sports data entertains: A baseball broadcast might sound like this: “Joe Standard is up to bat. His average is 290, having been 270 last year, for an improvement of 20 points since last calculated, and this is the first time that a 24-year-old player weighing 190 pounds has batted three times on a Tuesday and grounded out to left each time.”
Or golf: “Mack and Chuck are partners today. Never before have two players 5 feet 11 1/2 inches tall and each having placed third in The Open and fourth in The Closed taken the 2:14 starting time slot. The closest to this were Sam and George in 2013. They wound up 14th and 17th in the tournament.”
But standardized testing of public school students is neither entertaining nor useful. My 1950s high school tested then counseled each student about results, aptitudes, and how to improve. Not today. Instead, test scores are used not to help students, but to grade schools and to affect teacher compensation, practical effects based on manufactured data.
Unlike data about natural forces, such as wind and weather, inertia, weight, and forces like gravity and magnetism, data about educational results is manmade. Each question is created by man, each test graded according to artificial standards, each school measured according to whims of the day. For example, until this year Indiana schools were rated A-F largely on test scores, but this summer test scores were demoted to 50 % of the grade. Other arbitrary standards were given more weight. The change was not easy. Hours and hours of debate, teacher protests, expressions of parental dissatisfaction and refusal to take tests played a role. Data not accumulated was the amount of energy diverted from less important efforts, such as designing curricula and talking to students.
If you do not like results, change the standards. This happens in institutional investing. Real rates of return are compared to a standard, to an index or average, an arbitrary creation of a news source or an investment banking firm. An example is the Standard & Poors Index of 500 stocks. Why 500? Why not 250, or 2500? At the time, 500 had a ring to it, two convenient zeros like bench marks in the human aging process. You know. “Life begins at 40.” (Why not 41?) Earlier this year, the consultant to an endowment was not happy that real results did not match the selected index. What did it propose? Of course, change the index, or, better, create a brand new index “more suitable” to the account.
Don’t you love those calls asking for your political opinion or favorite candidate? I do not. Many do not. The result is that polls are increasingly inaccurate. But a poll is not a reality. “If the election were held today, so and so would win unless within the margin of error,” a fictional conclusion. What is the point? The only important matter is who wins on Election Day.
Data is so inexpensive today that every seller has surveys. Consumers may not leave the cash register without answering questions, may not hang up on a service call without being prompted to answer a “short” questionnaire, may not order on line without a follow up survey. With every competitor asking the same questions, all getting roughly the same answers, what is the point? The point is to create a staff position called “business intelligence.”
Here is my hyperbolic conclusion: never before in recorded history has so much energy been committed to information and to data instead of to production and service.
John Guy is a wealth manager in Indianapolis. His book is “Middle Man, A Broker’s Tale.”