Factor analysis is on the rise. It’s a practical way to deal with complexity.

People use complex systems all the time. Everyday life is composed of dynamic networks and complex systems. How do we achieve a certain mastery of complex systems?

Financial markets are complex. We depend on DJIA and NASDAQ to inform decisions.

Creditworthiness and risk markets are complex. Agencies and people use FICO to navigate them. Widespread use of credit scores has revolutionized credit and risk. Factor analysis has made credit far more widely available and cheaper for millions of consumers.

Human physiology is complex. Blood pressure must be monitored. Most people don’t know/care much about it. Diastolic, systolic, sphygmomanometers really aren’t important. to them.

People DO know hypertension is an indicator for a ton of problems. Ignore it and face stroke, kidney failure, diabetes, etc. Keep blood pressure in the 120/80 range for health.

With factor analysis, ‘gaming the system’ must not be used pejoratively. In an increasing complex world, gaming factors must be seen as positive. It is how to use complexity science to your advantage.

People ‘game’ their blood pressure with long walks and leafy vegetables. They game their FICO score by paying bills on time and keeping credit utilization low. Day traders game markets to make a living, and so forth and so on.

Thing is, no one can ever know how any complex system works. Its possible to achieve a certain mastery vis-à-vis factor analysis and gaming. These techniques inform our heuristics. With the proper heuristics we improve the probability of positive outcomes.