The pandemic and inflation have dramatically changed our lives, which makes calculations that rely on historical patterns less reliable than ever.
There is an inconvenient open secret that lurks behind many decisions we make every day. We live in a data-empowered era. When we plan a trip, Google estimates our travel time and recommends routes based on both current and past traffic data. Netflix suggests movies and shows we might like based on its data from people with similar taste. The Federal Reserve uses market and macroeconomic data to make projections about inflation and what it should do about interest rates.
The open secret is that data makes us slaves to the past. And when the world changes, data no longer tells us as much about the future, and we can end up making worse decisions. Coming out of the pandemic has caused significant chaos and changed many things about our lives. How it affects the data we use to make future decisions will matter for years to come.
Continue reading the entire piece here at Bloomberg Opinion (paywall)
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Allison Schrager is a senior fellow at the Manhattan Institute and a contributing editor of City Journal.
This piece originally appeared in Bloomberg Opinion