Summer Read: The Numerati

The Numerati, Stephen Baker, Haughton Mifflin

Ken’s Take: I read it so you don’t have to.

I was really excited when the TV show “Numbers” launched.  Being a quant guy, I thought the concept of solving crimes by using math analysis had a ring to it.  Disappointment set in (for me) when they started focusing on the characters and their relationships instead of the numbers.  Oh well.

Math overwhelming man

I was equally as excited about the prospects for The Numerati … and about equally as disappointed.  Nice topic, but way too superficial.

The central premise of the book is good: prolific data accumulation (including mucho private data), integration of massive data sets, high speed data access and processing, sophisticated statistical models and data mining algorithms, and an increasing number of uses and users … is making all facets of life more and more numbers based.

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Specifically, Baker provides some anecdotal examples of numbers-in-use:


  • In the financial markets: credit scoring by bankers and credit card companies started the snowball rolling …
  • In the workplace: some companies are already trying to derive behavioral profiles of employees that can provide insight re: how to motivate them, which teams to assign them to, and how to build a leveragable database of employee skills and interests.
  • In the store: some retailers are combining market research behavioral, and financial information to more closely target products and promotions ..  think of it as loyalty carding on steroids with a dose of customer profitability management.
  • In politics: the Chicago machine controlled precincts, the Bushies went after “values” segments and swing voters, and the Obama folks micro-targeted and “rolled up” using social marketing methods (e.g. Facebook, Tweeter).
  • On the blogs: some companies routinely scour the population of blogs to find references to their products that can be consolidated into a real time view of how the products are being perceived.
  • In the war on terror: neural data networks are processing a constant stream of information and electronic communications, hoping to spot behavior patterns that might provide an early warning of potential terrorist activity …  think “Patriot Act”
  • In the doctor’s office: electronic medical records appear to be gaining traction, providing docs with real time access, distributive capability (i.e. sending the info to other docs), and “evidence-based” analysis of best practices.  The looming questions: scalability and privacy.
  • In the heart: mate-finding sites (e.g. E-Harmony) are getting increasingly sophisticated – using behavioral and deep-psyche info and concepts to make the perfect matches.

Bottom line: For businesses, quant analytics used to provide a competitive edge.  Now, they are required just to compete.

For individuals, kiss privacy good-by and expect to be increasingly targeted with customized products and promotions.

“These statistical tools are going to be quietly assuming more and more power in our lives.  We might as well grab the controls and use them for our own interests.”

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