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Some of the Known Costliest Mistakes in the World, So Far

Oil Spill Disasters Can Be Beyond Cost - Agencia Brasil

From oil spills to war, anybody can make errors of judgment, but some lapses turn out to be eye-wateringly, jaw-droppingly expensive. And embarrassing.

According to Gary Belsky and Thomas Gilovich in Why Smart People Make Big Money Mistakes, people could avoid making major fiscal errors by application of what is emerging as a new science, ‘behavioral economics.’ This grew out of Israeli studies that were conducted thirty years ago; the studies examined the impact of rewards and punishments in judgment-making.

Belsky and Gilovich argue that in order to overcome blind spots that lead to financial errors, people must grasp the underlying psychological causes behind those decisions, both large and small – from buying/selling a house or stocks/shares, to grabbing supermarket bargains, betting and tipping. Decisions may turn out to be wrong only in retrospect; some decisions are made collectively and some decisions are concealed. When errors are revealed, they can be embarrassing or cause real anger, real hardship.

Britain’s Times reported in March 2010 that a Bugatti Veyron — one of the earth’s fastest, rarest, costliest (£380,000) cars — crashed while traveling approximately 100 miles per hour in an area with a posted speed limit of 40 mph. To date, this is the most expensive incident of car-related damage involving an individual’s family property.

Governments Make the Biggest Mistakes

In June 2006, ABC News reported that personal data on 2.2 million US military personnel was missing. Private details were stolen by a thief who grabbed computer disks in Maryland. A veterans’ group filed a lawsuit demanding the US government pay current and retired service men and women $1,000 each – that’s a total of $26 billion. Poor security is the most expensive error by government officials, yet.

In the UK, Her Majesty’s Revenue & Customs dealt with a 2007 mishap involving mislaid disks containing confidential details of 25 million Child Benefit recipients. Over 15,000 customers of insurers Standard Life were put at risk of fraud when a courier lost a disk containing their insurance numbers, dates of birth and pension data. The disk was in transit between HMRC National Insurance in Newcastle and Standard Life’s Edinburgh HQ when it disappeared.

In the same year, a laptop containing sensitive information was stolen from an HMRC employee’s car. They claimed data was still secure, refused to say how many people were affected or to name the employee who carried the computer in a private car.

In other UK cases, military information has been left on trains and buses; private health data, bank details sent to the wrong people. For instance, in April 2007, tax documents were found in a Nottingham Street.

Significant Mistakes in History

US and UK officials are not alone in making catastrophic errors.

Ronald Wayne has been confirmed as the original ‘third founder’ of electronics giant, Apple. He was working at Atari in California when he was asked to take a 10% stake in the new Apple venture, acting as a tie-breaker, if needed, between Steve Jobs and Steve Wozniek – they each held a 45% share.

Wayne gave up his chance after just a fortnight, fearful about borrowing money after a previous failed business experience. He signed away his stake and received $1,500 – less than one-thousand pounds. It’s believed that Steve Jobs is worth about £3 billion.

Wayne acknowledges he will be a footnote in history, but doesn’t entertain doubts about his 1976 decision.

Businesses are no stranger to mistakes and bad decisions. One case involves the San Francisco Chronicle, which reportedly turned down a deal that would involve paying $500 to the Washington Post for syndicated coverage from the Watergate scandal that ultimately brought down President Nixon, arguing that “there’d be no USA West coast interest.” The incident was reported in the UK’s Daily Telegraph in April 2010, though but there’s no confirmation on the news organizations’ websites.

There’s also the case of Elvis Presley, who was transferred to RCA by record company boss Sam Phillips for just $35,000. Decca Records passed signing The Beatles after an audition in West Hampstead, London, on the basis that in 1962 guitar bands were “on the way out.” That decision is now mocked as the greatest error in music industry history, though they were also rejected by several other labels, including Columbia, Philips, Pye and Oriel labels.

A total of nine separate publishing houses rejected JK Rowling’s manuscript for Harry Potter. Today, Rowling is estimated to be worth around £1 billion from her seven-book Harry Potter series.

Some Mistakes Can Turn Out Well

Not all mistakes are costly for the person or organisation responsible. The “Treskilling Yellow” postage stamp is worth about $7.5 million, as it is unique. It was printed yellow instead of green in Sweden in 1855. Nobody knows why or how, whether others were printed, or who was to blame, but none has come to light.

One bungle that the Washington Post described as ‘fortuitous error” occurred in US Congress in December 2005, when members, apparently eager to get home for Christmas, hastily drafted a bill to increase the interest rate paid by parents on guaranteed student loans. They applied it to banks and lending institutions, but not to the government-funded Direct Loan program.

They were set to simply amend the anomaly later, but had unwittingly unearthed the existence of working relationships between some schools and lending institutions, and discovered loans funded directly worked out cheaper for the taxpayer in any case.

Of course, in life, one person’s mistake is another’s opportunity.

First published on Suite 101, 5 June 2010.

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