The Pretense of Knowledge
By Jaffer Ali
The greatest obstacle to discovery is not ignorance, it is
the illusion of knowledge. –Daniel Boorstin
The title of today’s commentary was lifted from Friedrich
August Von Hayek’s acceptance speech for the 1974 Nobel
Prize in Economics. He chose that August forum to rail
against his discipline, for he had seen economics fall
under the sway of “physics envy.”
Thirty-five years later, his critique of the state of
economic theory still rings true, especially in the context
of the online marketing landscape. To wit, there is a
branch of online marketing whose preoccupation is collect-
ing as much data as possible on the individual and then
mining that data for discernible patterns of behavior. The
goal, according to Eric Schmidt of Google, is “to predict
even what you will search for before you search for it.”
In short, the goal of behavioral data collection is to
predict human behavior on a micro level.
Just as in economic theory, in which more and more
variables are measured in the vain attempt to predict
behavior, Hayek pointed out the human limitations inherent
in such complex behaviors and predictive systems. In
Hayek’s own words:
“We know… a great many facts which we cannot measure
and on which indeed we have only some very imprecise and
general information. And because effects of these facts
in any particular instance cannot be confirmed by
quantitative evidence, they are simply disregarded by
those sworn to admit only what they regard as scientific
evidence; they thereupon happily proceed on the fiction
that factors which they can measure are the only ones
relevant.”
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Marketing online has followed the path of mathematical
reduction. Proponents of this school of thought are not
the creative ad men of days gone by, but technocrats with
MBAs, engineering and yes, even physics degrees. Hayek
again cautions:
“It has led to the illusion that we can use this [math
technique] for determination and prediction… and this
has led to a vain search for quantitative or numerical
constants. This happened in spite of the fact that founders
of mathematical economics had no such illusions…Vilfred
Pareto, one of the founders of this theory clearly stated,
its purpose cannot be ‘to arrive at a numerical calculation
of prices’ because as he said it would be absurd to assume
we could ascertain all the data.”
Some reading this might protest that behavioral targeting
is useful even if we cannot ascertain all data for predict-
ion. After all, something is better than nothing, right?
Upon closer inspection though, the answer may be perhaps
not. Plausibility aside, in actual practice the false
illusion of knowledge we do NOT possess has proved
disastrous. Remember, marketers are making investments
based upon these admittedly flawed marketing premises.
Also, that which distracts marketers from doing what they
should be doing — namely marketing — is not a good thing.
If creativity becomes an afterthought, you are already
way behind in the game. If you are not constantly thinking
about what you can offer your audience, you already have
two strikes against you. Again Hayek:
“There may be few instances in which the superstition
that only measurable magnitudes can be important has done
positive harm…[but] an almost exclusive concentration
on quantitatively measurable surface phenomena has produced
a policy which has made matters worse.”
A growing number of online marketers want to wrest control
back from the quants. As self-proclaimed marketing experts,
they’ve had their day in the sun, right alongside the
legions of other soft “science” experts: the psychologists,
political scientists, economists, and historians. Like
everywhere else that quasi-science triumphs over common
sense, the quant stamp on the online market has been a
dismal failure.
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We all wanted marketing to become a science when it is in
fact, a lost art. Our collective delusion was that we could
hand the keys to marketing over to the guys with pocket
protectors. We abrogated our responsibilities as advertis-
ing and marketing professionals. We bowed to the false idol
of science. Hayek, a true scientist in his own right, said:
“Yet the confidence in the unlimited power of science
is only too often based upon a false belief that the
scientific method consists in application of a ready
made technique, or in imitating the form rather than the
substance of a scientific procedure, as if one needed
only to follow some cooking recipes to solve all social
problems.”
I can almost feel the daggers from the quants who are
still reading this. They inevitably will try to save their
discipline (and jobs) by claiming that they can truly
predict behavior. But the complex interaction of inherently
unpredictable human thought with unknowable events makes
this “discipline” even more of a fool’s errand; its
relative “success” limited in time and degree.
Who better than Professor Hayek to close this piece:
“If man is not to do more harm than good in his efforts to
improve [marketing models], he will have to learn that in
this, as in all other fields where essential complexity
of an organized kind prevails, he cannot acquire the full
knowledge which would make mastery of the events possible.”
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