Wednesday, August 31, 2011

Beware of Econometricians Bearing Spreadsheets

"Let's not kid ourselves: the most widely used piece of
software for statistics is Excel"
(B. D. Ripley, RSS Conference, 2002)

What a sad state of affairs! Sad, but true when you think of all of the number crunching going on in those corporate towers.

With the billions of dollars that are at stake when some of those spreadsheets are being used by the uninitiated, you'd think (and hope) that the calculations are squeaky clean in terms of reliability. Unfortunately, you'd be wrong!

A huge number of reputable studies over the years - ranging from McCullough (1998, 1999), to the special section in Computational Statistics & Data Analysis in 2008 - have pointed out some of the numerical inaccuracies in various releases of some widely used spreadsheets. With reputations at stake, and the potential for litigation, you'd again think (and hope) that by now the purveyors of such software would be on the ball. Not so, it seems!