The Moral Hazards of Measurements

Ed and Ron will explore the moral hazards of measurements. Exact measurements of the wrong things can drive out good judgments of the right things, imperiling our future. The illusion of certainty in our measurements creates, to borrow an important concept from the insurance industry, a moral hazard. If people are insured, they may just act carelessly and cause the very thing they are insured against. Fire insurance causes arson; unemployment insurance allows people to not be as diligent in finding a job. Our current cult of calculation, perpetuated by the infamous McKinsey maxim, What you can measure you can manage, creates the same type of risk, offering today’s business executives the illusion of control and mastery of knowledge. It allows them to substitute statistics for thinking. It gives them a false sense of security where there should exist more doubt.