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| Date: 2025-04-07 Page is: DBtxt001.php txt00023551 | |||||||||
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ECONOMICS
ECONOMIC ANALYSIS About a datapoint and the difference between more data and merely more precise data Original article: Peter Burgess COMMENTARY Peter Burgess |
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I am not sure when I stumbled on the idea that there is no such thing in economics as a 'datapoint'. What is seen as a datapoint is much more.
For a very long time I have always thought of an individual economic datapoint as being a simplification of a complete set of data at the point. Most commonly, I would think of the point as being a simplification of a 'bell curve' or normal distribution of the data related to that point. With this mental visualisation, the line on the graph gets to have a 3-D quality and a shape that changes along the line. This thinking is useful when thinking about real world management. Better performance can be realised by doing things that change the shape of the individual point ... by understanding what the shape of the 'point' really is and doing what is necessary to get performance to be at the best position within the distribution. Some analysts have difficulty embracing this notion ... but it has always worked well for me. Again this idea has served me well because it has made me treat simplified data with considerable caution, especially when the task at hand is to make predictions about the future from data compiled in the past. I have always tried to differentiate between what is truly more data and what is merely more precision around the same date. Sometimes, more precision is a useful thing to have, but most of the time more precision does not add much to the understanding of the subject. |
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