Date posted: August 5, 2010
It is often said you can prove anything with statistics. This is why some people avoid looking at information and data and concentrate on what they feel or believe instead. Should we always raise an eyebrow when presented with statistical information? Dr. Mike Walden, North Carolina Cooperative Extension economist in the College of Agriculture and Life Sciences at N.C. State University, responds:
“Well, yes and no. … I think the key with statistics is that you have to know the details of the statistical information. You have to know what details to look at. Let me give you a real simple example: One of the measures that we use to track the economy is something called average household income — simply the average income that the average household in the country earns. And let’s say that number is going down. Well, if that number is going down, most people would say, ‘Oh, it’s because households on average are earning less because of the lousy job market or whatever.’ But it could also be due to the fact that the number of households is actually growing very rapidly due to things that are unrelated to the economy. And indeed this is the case: If you look at household growth, the number of households increasing, a lot of that is due to the fact that more people are choosing to live individually. So single family households are going up. Also people are living longer, so we have more elderly households than we had before. And so the base in that number is growing more rapidly than the top part, the income part. And that is one of the reasons why average household income perhaps has been trending downward.
“But my point there is, you have to know enough about the statistic to look for that, to look for those details. So it’s not that statistics lie, it’s simply that you need to understand what you are looking at and really delve into those statistics to see what it is telling you.”
Category: Economic Perspective