Mark Chu-Carroll has an excellent smack-down, Financial Morons, and Quadratics vs. Linears. Mark notes:
There’s one minor problem with that argument: it doesn’t work. A couple of weeks ago, some idiot at JP Morgan circulated a chart that was supposed to summarize just how bad the financial disaster has been. The chart circulated for a couple of weeks – bounced from mailbox to mailbox, sent from one financial genius to another.
Only the chart was blatantly, obviously, trivially wrong, and anyone who had the slightest damned clue of the assets those businesses managed – i.e., the kind of thing that the idiot who drew the chart was supposed to know – should have been able to tell at a glance how wrong it was. But they didn’t. In fact, the damned thing didn’t stop circulating until (of all people) Bob Cringely flamed it. Go look at the chart – it’s up at the top of this post.
What Mark is pointing to is a pretty clear cognitive bias in terms of how we humans take in quantitative data presented in graphical form. You don’t have to be a moron, you just have to be processing on the the reflexive and implicit cognitive level. Here’s the problem: people were being paid a lot of money because of their presumed ability to extract themselves out of their animal milieu and operate as rational actors who engaged in reflective analysis. There’s not that much value-add in gut-level intuition. Below the fold is a commercial that anyone who has worked with MBAs might find amusing.