Saturday, October 27, 2007

The Costs of Mistakes

Often I see systems and individuals go to great expense in order to avoid making mistakes, but I don't think enough thought goes into weighing the cost of avoiding a mistake with the cost of the mistake itself. Sometimes it's much more efficient to simply accept a scenario in which mistakes happen and correct them where and when they occur.

If mistakes are easily detected and corrected, preventive measures may amount to not only an enormous waste of time but an enormous opportunity cost, because all that time spent on preventive measures might be directed toward more productive ends.

Exacerbating the situation is the question of expected costs. When preventive measures are a given, their expected costs and actual costs over a period are one and the same. Often the mistakes targeted by preventive measures are improbable and occur with extremely low frequency.

Even if the cost of the measure makes sense given the cost of the mistake, the overall costs may make no sense at all when the situation is assessed over a significant period of time.


Blogger Ian Gilman said...

Amen. On a related topic, don't scar on the first cut.

1:32 AM  
Blogger metamerist said...

Thanks. Another factor I've been thinking about on this front is the role of preventive measures in a C.Y.A. corporate culture.

I've seen situations where another driving force behind preventive measures appears to be protection from reprisals by political enemies.

In such an environment, people are more concerned with being able to prove they didn't do anything wrong than being able to prove they did something right.

5:54 AM  

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