For most of her life my mother was a very healthy woman. The only time she ever went to the hospital was to see my dad; and the only reason he was there was because he was the pharmacist. But as she reached her late 80s one malady after another finally landed her in the hospital as a patient.
I still remember my first visit to see her. I went into her room and we chatted for a while—then at some point I excused myself and went out into the hallway to the nurses' station. I found the nurse who was in charge of my mother and I asked her the obvious question: "How is she doing?"
In my naiveté I expected the nurse to respond something like "Well her strength is better, she's sleeping well, and her appetite is excellent"—the kinds of qualitative signs that the average person would understand. But the nurse didn't say that. Instead she turned around and pulled a clipboard from its plastic holder. Looking intently at the clipboard she began to tell me about my mom's blood pressure, heart rate, oxygenation and other vital signs that to her represented how my mother "was doing."
This interaction repeated itself every time I visited—and it quickly dawned on me that no one at the hospital had a complete picture of my mother's health.
In addition to my work as an investment advisor, I'm an EMT with a volunteer community emergency rescue service. So I'm more than aware of the importance of vital signs in making a patient assessment—because I measure them regularly. But signs of health are not just those things that lend themselves to quantitative measurement. When I arrive on scene and the patient is an infant, of course we check all normal vital signs. However, the mother's qualitative assessment of her child is a critical element in our evaluation—perhaps the most critical of all.
As I knew intuitively when I visited my mother, quantitative measures, while critically important, tell us only part of the story.
The catalyst for all of this reflection was Zachary Karabell's fascinating new book, The Leading Indicators: A Short History of the Numbers That Rule Our World. Karabell argues convincingly that our most common economic indicators—GDP, CPI, unemployment and trade data—were created for far different purposes and economic circumstances than they are used for today. As a result a growing number of sophisticated observers are discovering that the data from these indicators are deeply flawed and/or completely misleading.
A quick review of the research that fills my email inbox and articles in the financial press suggests that Karabell's insights are not likely to change our reliance on these indicators anytime soon—because flawed or not, as long as enough people believe there is value to them they will continue to be used. This is a classic example of the power and stickiness of simplicity.
One of the fascinating but challenging realities of life is its enormous diversity and almost infinite complexity. A notable benchmark of our advanced civilization is the creation of intellectual tools (or models) that simplify this complexity and allow us to gain both insight into and control over more and more aspects of our life.
Over time these models have become more sophisticated, more reliable and more effective. But like all intellectual tools, in the tradeoff to gain simplicity and utility, they are designed to discount or even ignore huge segments of the real world. This is an important insight: purposeful incompleteness can be enormously valuable—but only as long as the user acknowledges regularly the critical fact that what he is observing is only a partial picture.
