Making Good Economic Decisions with Stats – Plus Your Weekend Reads

Every friday here on the DorobekINSIDER we try and take a step back and look at the bigger picture. Today we are talking about making better decisions by using statistical models.

Jeff Grover is the author of the book Strategic Economic Decision Making. He told Chris Dorobek that using stats in your decision making process is kind of like the moneyball concept.

“Strategic economic decision making has its roots in the Bayesian Theorem. That model is very simplistic. It says someone can use information that has already been experienced in the universe and couple that with observational information and that grouping allows the decision maker to make the most economic decision based on simple statistical modeling,” said Grover.

Learn As You Go

“The beauty of the Bayesian Theorem is that it is a learning algorithm. As you get more defined paramaters your hypothesis becomes much more defined,” said Grover.

This Model Is Made For Leaders

“The model allows a framework for a key decision maker to point resources towards a decision based on all the available information out there that subject matter experts are aware of and are included in the modeling process. This makes the model a much more robust tool,” said Grover.

But It Doesn’t Work For Everything

“It still needs improvements. It is not great with financial markets or rapidly moving events. It is more a static protocol to use in identifying events,” said Grover.

Weekend Reads:

• FastCompany:How Reddit Became A Hub Of The Crowdsourced Boston Marathon Bombing Investigation
  Reddit’s users launched a new subreddit, Findbostonbombers, where hundreds of amateur sleuths are crowdsourcing clues and suspects in the Boston terrorist attack.
• Inc Magazine: 5 Tricks for Working With Millennials
• Welcome to the Data Driven World
• Why not measure how well government works?
• How an Excel error fueled panic over the federal debt
• 9 Illuminating Lessons on Creativity – World of Psychology
  

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