I saw an article from the Washington Post, December 15, 2017, saying the administrative/enforcement branch of the U.S. government is banning the use of certain words or phrases. Two of the phrases include “science-based” and “evidence-based”.
As many of you know, I am an active advocate of Evidence Based Valuation.© If valuation based on evidence is so much better than that based on “good judgment,” why does it not dominate?
(This is an overview of the larger discussion, which will appear in Ann O’Rourke’s Appraisal Today paid newsletter for January, 2018).
If science-based valuation is so darn good, why is it just now becoming popular? There are many explanations:
- Personal resistance to change
- Organizational inertia
- Profession cultural norms
- Client expectations
- Regulatory edicts: license and banking
When it comes to change, appraisers have two strikes. First, we are of a “conservative” calling, supposed to be analytical, rather than expletive. Second, we’re human beings, automatically relying on the ‘tried and true’ as a steadier and easier way to do things. This is enhanced by the nature of our training. Most of what’s useful, we learn from our mentors and bosses – who in turn learned from their mentors and bosses. Then – across peers, this forms a culture of orthodoxy. Proposing change can bring unease, even fear, when old ways are challenged.
The cultural norms become formalized; in standards, regulations and client demands. The old, less productive way is enforced. It’s embedded in our literature, our education, our standards of practice, and government regulation. USPAP and our core education curriculum emphasize the “three approaches.” These are subjectively intermeshed and often “inbred” in the data. The three designated models are required in USPAP, when necessary for believability.
So we have two different ways of valuation. “Trust me” vs. “See my work.”
In traditional appraisal, the data selection is “judgment based,” with the overall test of acceptability being “credible” or “worthy of belief.” The process starts on a subjective basis, and concludes on a review – a personal judgment on believability.
In Evidence Based Valuation© the data set is analytically determined. The overall test is reproducibility. Modeling decisions are dramatically reduced, and usually obvious. Data inbreeding is analytically eliminated. The process starts on an objective basis, and concludes with a risk-scored, replicable analysis. The appraiser is judged not on judgment, but on the clarity of reproducible analysis.
Science Based Valuation© is not banned, but it’s sure not encouraged!