1. What are the four stages, as identified in the article, of data analytics significantly influencing the traditional business operations / decision makings in specific industry?
2. Based on the explanation in the article, which discipline/industry do you think will be ripe for the next breakthrough in big data analytics? Why?
3. In your own word, explain what potential disadvantages over‐relying on data analytics would bring to decision making. Give some specific examples.
This material may consist of step-by-step explanations on how to solve a problem or examples of proper writing, including the use of citations, references, bibliographies, and formatting. This material is made available for the sole purpose of studying and learning - misuse is strictly forbidden.The Advantages and Pitfalls of Big Data
In the article, “Why Quants Don’t Know Anything” (Wired Magazine, January 7, 2014) Felix Salmon discusses the rise of “Big Data” and how it is used and misused. Big Data is a powerful tool – Salmon credits Barack Obama’s 2012 reelection to his campaign’s use of data analytics, for example – but argues that it can lead to perverse incentives.
“Quants” are quantitative analysts, which Salmon defines as “people whose native tongue is numbers and algorithms and systems rather than personal relationships or human intuition.” He describes the role of quants in financial services and in sports (as seen the film, “Moneyball”). Actuaries are probably the original quants.
An actuary is a person who calculates the value of risk. Actuaries developed “life tables” that tell insurance companies how much to charge for life insurance, computer models that tell an insurance company how much damage they can expect from hurricanes that hit the Atlantic coast, and algorithms to tell whether a person with a poor credit score is a bad driver.
The rise of quants comes in four stages. The first is pre-disruption. There are no quants. In insurance, this was hundreds of years ago. In seventeenth century London, ship owners would gather at Edward Lloyd’s coffee house to find underwriters for marine insurance. People would sign up on a document (writing their names under the description of the cargo and its destination, hence the name “under writer”). The price charged for the insurance was set by consensus of the underwriters....