Medalball - Statistics is a Science

Okay, real quick. Before we are all fully recovered from our Olympic hangovers, I thought that it would be helpful for me to bring to every one's attention Nate Silver's article from a few days ago about using data to identify which sports a poor nation should focus their resources on if they want to medal at the Olympics: Medalball.

As many of you may know, Josh and Alex like to use Michael Lewis’s famous book-turned-movie "Moneyball" as an analogy for the work that we do at DonorCast helping nonprofits to identify the ways to get the best fundraising returns given their usually limited financial resources. Nate's article uses the analogy as a way to give direction to small, poor nations that might want winning a medal at the Olympics to give their countries a PR boost. But what I like most about this article is it's structure, and how it sheds light on the logic and thought that is needed to give context and underlying reasoning to the use of statistics and quantitative methods. 
Too often in our careers we encounter clients, decisions makers, or individuals that just want to know "what the data says" or to be "given the stats". They will then use this measured, quantitative information to make a decision. But really, it's not that easy, and actually such an approach can be very dangerous. 

What many people often forget, especially non-quantitative professionals, is that statistics is a science, the science of uncertainty, variability, and decision making. The scientific method requires the testing of a hypothesis, or proposed explanation of a phenomena. This means the stats don't tell a story by themselves, stats are only tools that we use to paint a clearer picture of phenomenon that we already believe that we have a good idea of how it looks. Statistics and data are properly placed at the end of a decision making process, not at the beginning.

Colin Mallows, the one time President of the American Statistical Association, once stated that "statisticians should give more attention to the questions that arise at the beginning of a problem or an issue:

1. Consider what data are relevant to the problem,
2. Consider how relevant data can be obtained,
3. Explain the basis of all assumptions, 
4. Lay out all sides of an argument,
5. Formulate questions that can be addressed by statistical methods."  

This is what Nate Silver does in Medalball. He begins with considering what data is relevant to solving the problem of "which sports a small country with limited resources should direct their energy to in order to maximize their medal count". He already had a string of logic that he would wanted to follow in order to solve the problem that he then used statistical methods, in this case descriptive analysis, to verify and test his hypothesis. 

Statistics and data are not replacements for thought and contemplation, instead they are merely powerful aids for better understanding our already formed ideas and presumptions about the world.