Misunderstanding A Problem Is Expensive

Suppose there is a problem in your life.  Suppose further that you wish to solve it and have the resources to do so.  But, somehow you have misdiagnosed it.  Some problem sources are superficial and obvious but not real.  I am having a heart attack. It hurts.  Where are the painkillers?  Kind of dumb.  The pain is not the problem.

Solving the wrong problem, or treating something innocuous as a problem, is very costly.  You have spent resource for nothing and you may have complicated other aspects that used to work well.

Impatient people want answers now, even though those may not work.

“The creative person is willing to live with ambiguity. He doesn’t need problems solved immediately and can afford to wait for the right ideas” Abe Tannenbaum

In society there are all sorts of things that might or might not be a problem.  Pay equity, voter registration, homelessness, climate change, racism, cancer causing chemicals and many more.

From a pragmatic point of view, we could sort them from biggest loss, lowest cost to act and likely to be true, to smallest loss, high cost to fix and uncertain.  Then allocate resources to solutions.  Priority order and deal with the ones with the biggest probable payback for acting.

Doing this would eliminate the rhetoric and optical illusions that we presently are party to.

There would be some serious and difficult questions.  Things like how much is a human life worth?  Suppose we could agree on $25,000,000.  There are many banned substances and procedures that are costly to replace with any other method. Their efficacy is such that the saving of human lives drives their cost well past that cutoff.

The agricultural chemical Alar is an example.  Banned decades ago at considerable cost, (upwards of $100,000,000 the first year, ) The California Department of Food and Agriculture estimated the life saving value was 3.5 lives per billion of population per thousand years.  I doubt many sane people would be willing to commit to that invoice.

Bjorn Lomborg did some work on this in the 90s.  Some regulations have 12 zero costs per life.

Another concern would be to determine the required thickness of skin.  How offensive must someone be to qualify for sanction?

People should be required to learn basic statistics.  The delusional ideas most people have about statistics can fill a book.  Sadly, obvious looks right, but usually is not.  There are examples here.  Pay careful attention to the Berkley example.

Babbage_Difference_EngineCharles Babbage designed, but never built, a machine to calculate logarithms and other polynomial functions.  He had this to say about his experience seeking funding from the government.

“On two occasions I have been asked, ‘Pray, Mr. Babbage, if you put into the machine wrong figures, will the right answers come out?’    I am not able rightly to apprehend the kind of confusion of ideas that could provoke such a question”

We attack problems that may not be problems and rely on people who do not understand what they see to design the solution, or at a minimum support the solution.

That is a fool’s game. We could solve problems better by organization and focus.

Don Shaughnessy is a retired partner in an international public accounting firm and is now with The Protectors Group, a large personal insurance, employee benefits and investment agency in Peterborough Ontario.

Contact: don@moneyfyi.com  

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