Can you measure Ethical Behavior? An interview with Dr. Rigobon

In this episode of the Masters of Data podcast I speak with Roberto Rigobon, Professor of Applied Economics at the MIT Sloan School of Management. He has been teaching and advising students at Sloan for over 20 years and he has won both the “Teacher of the Year” award and the “Excellence in Teaching” award at MIT three times. During our conversation Roberto shares with me his theory of “Aggregate Confusion” and how we measure the wrong things at the wrong time, as well as some strategies that can better address the inefficiencies surrounding how we measure ethical behaviors.

As Roberto shares, his current focus on economics and measuring ethical behavior was not always his intention. Born in Venezuela, he studied chemistry in his early college years but then transitioned his academics to electrical engineering, which he soon discovered he did not like. From there he then changed his discipline to management, earning his MBA from MIT, while also beginning to focus his time and attention in the area of economics. Inevitably he has not left MIT since and he has been there for 25 years as both pupil and now professor. As a professor he now he applies his knowledge to teaching basic macro-economics, a study which helps his students focus on how political events and economic outcomes interact with each other. His professorship also helps him communicate why policies are hard to implement socially and economically as the world continues to become more like an emerging market. But his economic focus does end there. Outside of the classroom his research also compliments his teaching theories as he is researching ways to improve how we measure our lives and how to adapt how we measure the ethical behaviors in the world around us.

As Roberto and I discuss, data is so deeply tied into our world today (as well as informing how we make decisions) — so how we measure the data is massively important. The tendency across the globe is to only concentrate on extreme behavior of behavior that grabs our attention most. Pairing this reality with the trend that we tend to measure very infrequently, explains why it’s so often hard to make any decisions. This is where Roberto’s theory of aggregate confusion comes in to play as people begin to think about how we can measure ethical behaviors, not just data. The challenge as he sees it (as the basis of his theory) is that we often measure our perception, about something, not facts. And that means that we then concentrate on the wrong statistics which become influenced by our perception, rather than facts. How do we see this come into play in the real world? As Roberto and I discuss, we often measure things that we know are morally incorrect without a set of facts to back them up. We have a lot of moral judgements without any evidence, but then we have no idea how to react to whatever data we produce. The theory of aggregate confusion seeks to try and understand why the measurements that exist in these circumstances are so inconsistent and actually provide a way to create new measurements.

During the discussion Roberto and I also identify a real problem when it comes to measuring ethical behaviors. The truth is that people usually do not get outraged by statistics themselves, but rather they get outraged by the images or the visual and emotional connection they have to something related to the statistics. When this is the case and we only actually measure the moments when we are outraged, we make very emotional decisions which focus on the short term rather than finding a solution for the long term. The result is not only ineffective temporary solutions but many times that we are not actually improving society at all, which is the overall goal. But hope is not lost. Roberto feels strongly that to resolve this we have to become more effective at measuring the process before we get to the extreme (emotion-inducing) results by allowing people and organizations to measure themselves more efficiently. The overall approach to measuring data, which has historically been focused on perfectly measuring something that is irrelevant, has to be adapted to imperfectly measuring something that is relevant which can result in actually changing our ethical behaviors as a society.

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