True Butterfly Effect?

In my last entry I mentioned a phenomenon called the butterfly effect, a theory that says that even very small things can lead to e chain of actions that in the end cause much larger impact that anyone could expect. Today I would like to complement with an example which proves how easily it can happen.

This morning I was about to throw out a bunch of old papers, when I saw the headline about SCB (Statistic Central Bureau) on the front page of DN from 2008-09-10. Of course I’ve seen it before and I’ve read the article itself, but at that time I just didn’t think of it in terms of the butterfly effect.

The article is about a code error in SCB’s system that led to an incorrectly calculated rate of inflation in Sweden and therefore misled the Riksbank to increase the repo rate as part of their monetary policy. SCB has calculated the yearly rate of inflation to 4.4%, when in fact it was only 4.1%. The increased repo rate will now cause troubles for a considerable part of the Swedish population in need for loans to finance their houses. People forced to take new loans after the Riksbank’s decision about the increase will end up paying more than they actually should, which of course will lead to a reduction in their private savings. And all of this just due to a small error in SCB’s system, isn’t this a true butterfly effect?