The dismal failure of 'Big Data'

Summary:Economists have no clue despite all the Big Data at their disposal...

HilaryMason
Data scientist Hilary Mason at a GE Software panel.

The excitement about "Big Data" in tech circles is very optimistic and many companies are rushing to hire "Data Scientists" to profit from the explosion of hype about the reams of data collected inside their own organizations,  and in the world outside.

But having access to Big Data doesn't guarantee that companies, or individuals, will understand or be able to derive much value from it. The very few examples of companies doing that, are very few. And for a good reason – finding insight in all that data is difficult and becomes more difficult the bigger the data sets.

Take for example the field of economics — it's the original Big Data profession. But in all these years, it hasn't been able to do much at all. The profession is well regarded and respected despite its collective failure to understand the economy and predict its behavior.

Surely, a Big Data profession such as the study of economics over the past 150 plus years would by now be refined and almost scientific in its precision, especially since these days we have as much compute power as an economist might need, not to mention even more data to analyze. But it's not even close.

After the financial meltdown in 2008, Alan Greenspan, the former Chairman of the Federal Reserve was asked questions by a Washington committee about how the crisis occurred.

He said all his financial models over the past 40 years were wrong. Yet those models informed his adjustment of interest rates, and if they were based on wrong models, he likely harmed the economy, consistently, decade after decade. It's truly an epic fail for Big Data.

It doesn't require much Googling to discover more examples of the deceit of economists and the failure of Big Data:

How Did Economists Get It So Wrong? - NYTimes.com

It’s hard to believe now, but not long ago economists were congratulating themselves over the success of their field. Those successes — or so they believed — were both theoretical and practical, leading to a golden era for the profession.

The puzzling failure of economics | The Economist

The Financial Crisis and the Systemic Failure of Academic Economics

Economics has failed us: but where are the fresh voices?Broken Recovery: Have Economists Failed Us | TIME.com

Economics is easily the single most important failure of the application of Big Data. And to call economics the "dismal science" is unfair on scientists because there's nothing scientific about it.

How will our new workforce of data scientists fare in their missions? I predict dismally. It's better they avoid Big Data and focus on the small data — just the bits that matter. 

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Talent Shortage Looms Over Big Data - WSJ.com

Become A Data Scientist ... In 12 Weeks? | Big Data

 

Topics: Big Data

About

In May 2004, Tom Foremski became the first journalist to leave a major newspaper, the Financial Times, to make a living as a full-time journalist blogger. He writes the popular news blog Silicon Valley Watcher--reporting on the business of Silicon Valley.Tom arrived in San Francisco in 1984, and has covered US technology markets for leadi... Full Bio

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