Not long ago, I was at a dinner with the chief executive of a large bank. He had just had to decide whether to pull out of Italy, given the weak economy and the prospect of a future euro crisis.
The CEO had his economists project out a series of downside scenarios and calculate what they would mean for his company. But, in the end, he made his decision on the basis of values.
His bank had been in Italy for decades. He didn't want Italians to think of the company as a fair-weather friend. He didn't want people inside the company thinking they would cut and run when times got hard. He decided to stay in Italy and ride out any potential crisis, even with the short-term costs.
He wasn't oblivious to data in making this decision, but ultimately he was guided by a different way of thinking. And, of course, he was right to be. Commerce depends on trust. Trust is reciprocity coated by emotion. People and companies that behave well in tough times earn affection and self-respect that is extremely valuable, even if it is hard to capture in data.
I tell this story because it hints at the strengths and limitations of data analysis. The big novelty of this historic moment is that our lives are now mediated through data-collecting computers. In this world, data can be used to make sense of mind-bogglingly complex situations. Data can help compensate for our overconfidence in our own intuitions and can help reduce the extent to which our desires distort our perceptions.
But there are many things big data does poorly. Let's note a few in rapid-fire fashion:
Data struggles with the social. Your brain is pretty bad at math (quick, what's the square root of 437), but it's excellent at social cognition. People are really good at mirroring each other's emotional states, at detecting uncooperative behavior and at assigning value to things through emotion.
Computer-driven data analysis, on the other hand, excels at measuring the quantity of social interactions but not the quality. Network scientists can map your interactions with the six co-workers you see during 76 percent of your days, but they can't capture your devotion to the childhood friends you see twice a year, let alone Dante's love for Beatrice, who he met twice.
Therefore, when making decisions about social relationships, it's foolish to swap the amazing machine in your skull for the crude machine on your desk.
Data struggles with context. Human decisions are not discrete events. They are embedded in sequences and contexts. The human brain has evolved to account for this reality. People are really good at telling stories that weave together multiple causes and multiple contexts. Data analysis is pretty bad at narrative and emergent thinking, and it cannot match the explanatory suppleness of even a mediocre novel.