David Brooks says Big Data matters, but perhaps not as much as people think:
Big data has trouble with big problems. If you are trying to figure out which e-mail produces the most campaign contributions, you can do a randomized control experiment. But let’s say you are trying to stimulate an economy in a recession. You don’t have an alternate society to use as a control group. For example, we’ve had huge debates over the best economic stimulus, with mountains of data, and as far as I know not a single major player in this debate has been persuaded by data to switch sides.
Paul Krugman takes a look and says, “Waittt a minute here:”
It would be lovely to live in a world in which the failure of interest rates to soar as predicted would lead Brian Riedl of Heritage and Niall Ferguson to concede that their anti-stimulus critiques of 2009 were based on a completely wrong model; in which the economic downturns that have followed austerity policies almost everywhere they have been applied would lead Alberto Alesina to concede that his work on expansionary austerity was probably flawed, and lead George Osborne to proclaim publicly that he led Britain down the wrong path. But such things very rarely happen, and the fact that they don’t happen has nothing to do with the limitations of data…
So yes, it has been disappointing to see so many people sticking to their positions on fiscal policy despite overwhelming evidence that those positions are wrong. But the fault lies not in our data, but in ourselves.
It’s a good point from Krugman, who’s also been quite busy dealing with other knuckleheads.
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