Judgement vs Models

In my reading, I came across this chart not long ago which is profoundly revealing:

PricewaterhouseCoopers did a global survey in 2016 asking executives how decisions were made in their industry on the continuum between either being more reliant on human judgement or more dependent on computer models. The most algorithm-driven (and data-driven) industry was, not too surprisingly, Insurance, with Industrial Products and Technology tied in second place. At the other end of the spectrum, and the reason for this piece, was the Asset Management industry: of all 13 industries surveyed, Asset Management was far and away the most reliant on judgement and the least informed by computer models. 

That’s a remarkable finding. In other words, decision-making in the Asset Management industry is more based on “old-fashioned” human judgement and less informed by computer models and algorithms than twelve other “industries” including Communications, Automotive, Healthcare, Energy, Retail, Banking, Technology, and (shockingly) even Government. 

To be more reliant on judgement and less on models is also to be generally more subject to emotion. To read the full article, click the below link: