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As an economics major, I’m embarrassed about how little I know the works of Adam Smith. The founder of the discipline, Smith is rarely read past the famous line about the butcher and baker, which comes from The Wealth of Nations.
Then there’s The Theory of Moral Sentiments, which is even less read. Russ Roberts serves as Smithian sherpa in How Adam Smith Can Change Your Life. The book details real-life takeaways from Smith’s Theory of Moral Sentiments.
Roberts shows how Smith’s thought can make you a better parent, teacher, or spouse. Like with many of my posts, I want to frame this in a way to help the data analyst. I would like to show how these can make one a better analyst, also.
1. Use the “Iron Law of Me.”
People frame their problems in terms of their interests. It’s what they know the best, and it impacts them the most. Roberts calls this Smithian insight the “Iron Law of Me.”
A college professor, Roberts notes how many students show him cover letters detailing all the reasons they want to work at X company. Using the Iron Law of Me, the cover letter ought to spell out what’s in it for the hiring manager.
This works once you’re in an office, too. When working through a problem, it is better to think about it from the clients’ side. As an analyst, I can come up with the slickest data model. But, if I don’t help the client understand and implement, the model is not worth the pixels it’s displayed on.
2. Consider the Impartial Spectator.
Smith encourages us to frame our behavior by the standards of an imparial spectator. Similar to a conscience, this is someone who evaluates whether our behavior is kind and just.
Remember the impartial spectator when writing your emails. Think about how an unbiased third party would react to your coworker strife. This allows you to look at the problem dispassionately and come to a fair solutiion.
3. Model humbly.
Analysts take messy, ambiguous data and attempt to make ordered observations. While a fruitful practice, it is important to be humble. There is hardly a model that couldn’t be argued from both sides. So you need to be humble.
Remember that in classical inferential statistics you can never really prove anything — you just fail to reject the null. Modern data-mining techniques sometimes don’t really have a thesis to check — they just find interesting relationships in the data. These relationships can be powerful — but they can also be spurious.
A good analyst draws on domain knowledge to make sense of the relationships uncovered. Without this kind of insight, data analysis can go off the rails, resulting in unrealistic models and the belief in relationships that don’t really exist.
Roberts, an economist, comments on the use of models in social science. He notes that sometimes we behave like “drunks looking for our lost keys under a lamppost not because that’s where we lost our keys, but because that’s where the light is.”
4. Norms establish behavior.
Smith teaches that paradoxically, the biggest changes in society emerge from the tiniest actions of individual actors.
No official referree of English decided that “Google” was an acceptable verb. But as individuals started accepting the word in speech and writing, it became part of the English language.
Adam Ferguson, Smith’s contemporary, called this phenomena the result of human action, but not of human design. Later economists introduced a similar concept: spontaneous order.
How does this relate to the modern-day analyst? It is difficult to establish company culture from the top. Norms of behavior are established at the individual level. Companies often have codified cultures or mission statements. But what is cause and effect? Smith would argue that these cultures can only “stick” based on the underlying actions of individuals.
If your coworker needs help, offer it. Frame your dilemmas from the perspective of an impartial spectator. Think about how your work benefits the end-user, not you.
Adam Smith died long before the modern data-driven workplace, but his guidance is indispensable. Perhaps it’s time to organize Smithian corporate retreats?
Photo of Edinburgh, Adam Smith’s home, courtesy of user airaloch on Pixabay.