I love to tell the story of Milton Friedman’s brush with actuarial science, as he does above. (Shorter Milton: The exams were too hard.)
Today we get the cautionary tale of two economists who bollixed the AVERAGE formula in Excel. That and a couple other dubious adjustments led them to publish a paper that, while incorrect, was highly influential. (See also here. Authors’ response given here.)
I’ve reproduced the error below, taken from a Salon article:
By coincidence, I recently made a similar error in a pricing model. My formula was supposed to sum the numbers in a column but failed to capture all of them.
I was corrected by a sharp peer reviewer. Why weren’t these guys?