Briefs

By Jack Uldrich October 31, 2007

Following the economics best-sellers Freakonomics and The Black Swan, Super Crunchers: Why Thinking-By-Numbers Is the New Way to Be Smart is the latest book to throw a healthy dose of cold water on conventional wisdom. It's an excellent book, and I would strongly recommend that Foolish readers pick up a copy. It's sure to shed considerable light on how the rapidly maturing field of data mining is transforming the commercial marketplace.

Stop "wine-ing" and listen up

The book, written by Yale econometrician and lawyer Ian Ayres, begins with a wonderful anecdote that describes how data mining is revolutionizing the field of wine selection. For years, conventional wisdom held that only highly qualified wine experts -- using the time-tested skill of "swishing and spitting" -- could accurately assess whether a certain wine would grow in value over time. But Orley Ashenfelter, a Princeton economist, has thrown the field into disarray by daring to suggest that wine quality can easily and accurately be determined by assessing only the amount of rainfall and the average temperature of the growing season. Specifically, Ashenfelter has shown that wine quality = 12.145 + 0.00117 x (winter rainfall) + 0.0614 x (average growing season temperature)-0.00386 x (harvest rainfall).

The world is awash in data, and businesses are just beginning to discern what all of it really means. Those who can devise algorithms to decipher those reams of data, and then have the courage to assess and act on the findings, will gain a significant competitive advantage in this new world, according to Super Crunchers.

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