Suppose that the following (very simplistic) financial projection for the “next” period arrives in your hands:
Unfortunately, a forecasted numerical value is rarely accurate, because the projected “number” is inevitably “off” by some (often significant) amount.
Contrast the above with this second story. In this instance, the analyst hands you a financial projection for the same next period; the report begins again with the worksheet displayed above. However, the report continues with additional information as shown in the tables and graphs that follow:
The moral of the story is that a “number” in itself is rarely sufficient information and justification for financial decision-making. In many ways, financial managers must be able to “hear” and “feel” the meaning of probabilistic reporting much like the conductor of a symphony orchestra must hear and feel the meaning of a musical score. Effective financial managers maintain a polyvalent sensitivity toward a complexity of factors and dependencies in order to transcend numerics as guidance for decisions. In this manner, the art of financial economics embraces its science.
The best art is something that strikes a chord with the viewer or listener. It expresses something that the viewer or listener has experienced himself and it expresses it in a way that enables him to focus his feelings or ideas about it. You read a novel and it expresses some kind of idea with which you can empathize, or perhaps something that you yourself have thought about or experienced. Take a sculpture or a cubist painting. It expresses some reality, some insight, in an ideal way. That is what the best mathematical economics does. It is a way of expressing ideas, perhaps in an ideal way.here.
Source: Aumann, R J (2000). Economic Theory and Mathematical Method: An Interview. In Collected Papers (Vol I, pp. 135-144). Cambridge, MA: MIT Press.
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