Statistician and economist Nassim Nicholas Taleb has written an essay on what he calls the Fourth Quadrant, or the statistical “danger zone”. It’s in depth and I found it technically challenging to understand: but I felt it was well worth it in the end. Seriously, go read it, it makes you feel cleverer. The gist:
Statistics can fool you. In fact it is fooling your government right now. It can even bankrupt the system (let’s face it: use of probabilistic methods for the estimation of risks did just blow up the banking system).
Taleb rails against the misuse of statistical economics that has lead us to our current economics woes. Also check out the various responses to Taleb’s essay by assorted luminaries.