25 October 2009

Sloppy financial databases. Also, Gaussianism.

Marginal Revolution | Tyler Cowen | Sentences to ponder
By enlisting Teradata, a major bank found its credit-card unit was sending pre-approval notices to individuals being foreclosed on by its mortgage department...
Here is the story (gated, Barron's) and I thank John De Palma for the pointer. Here is a brief bit on Teradata.
Wow. Just wow.

Instead of scouring campuses for physics majors capable of handling their Gaussianist statistical models, perhaps banks should invest in a humble DBA with an average dose of common sense and let him clean shop.

PS At current, there are only 50 Google hits for "Gaussianism." It seems it has been coined independently several times. I began doodling the word two falls ago when I was taking a particularly poorly taught course in statistical learning methods. I use it to mean a fetishization of normal distributions because they make analysis easier or more interesting, coupled with a disregard for whether or not the underlying process in actually normal. My professors was particularly guilty of this sin, as was, apparently, most of the financial industry.

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