There is a more general problem here. The risk models of the financial geeks, the climate models of the environmental geeks and the medical models of the health care geeks are all ultimately forms of social science. But social science ultimately is not science but art.
The geeks use numbers to try to understand the world. And their work is helpful, up to a point. We can measure the damage to our economy better today than during the 1930s because people then didn't know what the gross national product was. The geeks had not yet invented the formula.
As an avid consumer of political and demographic data since childhood, I am not inclined to say that statistics and formulas are worthless. Rather to the contrary. I grew up knowing that I was one of 1,849,568 people living in Detroit in 1950, and the Census Bureau's estimate that there are only 916,952 people living there today tells you something worth knowing.
But numbers are not reality -- they are just clues. In 1965, Daniel Patrick Moynihan, perhaps the most perceptive social scientist of recent times, looked at the numbers of black babies born out of wedlock and predicted a grim future that came to pass. It was not just the numbers, however, but his own experience as a fatherless child that produced this insight.
The financial "quants" failed to realize what a trip to subprime mortgage territory in California's Inland Empire might have told them.
The climate modelers work with historical data that do not necessarily predict future weather patterns. The medical statisticians cannot know the human factors that prompt a sensitive clinician to make lifesaving decisions. Geeks with formulas can help us understand the world better and make informed decisions. But the collapse of our financial institutions tells us that we would be fools to rely on them completely in ordering our great institutions.
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