Folk numeracy

16 10 2009

According to Michael Shermer, who coined the term, Folk numeracy is our natural tendency to misperceive and miscalculate probabilities, to think anecdotally instead of statistically, and to focus on and remember short-term trends and small-number runs.

For more explanation, read his article “Why Our Brains Do Not Intuitively Grasp Probabilities” on Scientific American.

Well, this looks like heavy stuff and in a way it is. This term doesn’t seem to be a very well-known one and googling it will only point you to the Michael Shermer’s articles on Scientific American and his book The Mind of the Market. Then, how and where (and why) did I come across this term? This was brought up by my instructor in the BI/DW class. To be frank, I didn’t see the connection then and have difficulty to comprehend the association even now. 🙂 My best guess is that he might be referring to the enormous amount of data involved in a BI project, and our incapability to accurately gauge it.

Anyways, I duteously read the recommended articles and even got a copy of The Mind of the Market from the library. I felt drawn to the concept and immediately became curious to know more. So, I’ve started reading the book. I have to admit that I’m actually struggling through the book, trying to understand the heavy economic and evolutionary jargon, supplementing my mission with inputs from the wikis to make myself familiar with such concepts as liberalism, conservatism, capitalism, mercantilism etc. Despite the huge effort, I’m persevering in the hope that the read would be rewarding in the end. Now, after reading 3 chapters, I must say I’m glad that I stayed on course. Obviously some of the stuff is above my head but reading such a complex work is a new experience for me.

Till now, he talked about how the evolutionary and economic systems are similar in that they are both driven from the bottom rather than from the top. In  Nature, evolution is caused by the natural selection (the actions and interactions of the nature and life) and not by some designer at top. Likewise, the economy is driven by the consumers and not by the producers/government. Michael Shermer is clearly pro-Adam Smith and pro-Darwin. As you all know, Adam Smith is often regarded as the Father of Economics. His most notable contribution is ‘The Wealth of Nations’, in which he argued against mercantilism and for barrier-free trade/market.




One response

15 11 2009
Money and happiness « Peek Inside My Mind

[…] most complex and in-depth book I’ve ever read. I talked a little about it in my earlier post – Folk Numeracy. Now that I’ve finished reading it I have more to […]

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