Microsoft Excel makes it easy for anyone to do the kind of number crunching once reserved for accountants and statisticians. But the world’s best-selling spreadsheet software has also contributed to the proliferation of bad math.
Close to 90% of spreadsheet documents contain errors, a 2008 analysis of multiple studies suggests. “Spreadsheets, even after careful development, contain errors in 1% or more of all formula cells,” writes Ray Panko, a professor of IT management at the University of Hawaii and an authority on bad spreadsheet practices. “In large spreadsheets with thousands of formulas, there will be dozens of undetected errors.”
Given that Microsoft (US:MSFT) says there are close to 1 billion Office users worldwide, “errors in spreadsheets are pandemic,” Panko says.
Such mistakes not only can lead to miscalculations in family budgets and distorted balance sheets at small businesses, but also might result in questionable rationales for global fiscal policy, as indicated by the case of a math error in a Harvard economics study. By failing to include certain spreadsheet cells in its calculations, the study by Harvard economists Carmen Reinhart and Kenneth Rogoff may have overstated the impact that debt burdens have on a nation’s economic growth.
The problem is so widespread that there are now whole groups devoted to stamping out spreadsheet snafus, such as the European Spreadsheet Risks Interest Group. There’s no question that spreadsheets are a powerful tool, essential to the functioning of the modern world, the group’s chairman, Patrick O’Beirne, tells MarketWatch. “Chainsaws are also a very good tool, but who would use one without a chain guard,” he says. “People don’t take safeguards to ensure their work is correct — in fact, in many cases, all it would take to catch these errors is a second set of eyes.”