Fascinating discussion on how basic math discussions have been bastardized:

“Numbers lack warmth. Cold as last year’s love, they sit counting their fingers. Think of numbers and what do you see? Dust and ledgers and the yellow fingers of a parched accountant.

No longer. Numbers have had the mother of makeovers. No ordinary scrubbing up, shiny PR or new logo, this transformation is complete: they have turned into their opposite.

Once they stood aloof. Now they gush. Now you can’t shut them up for heart-felt passion. They cry and cheer and sneer and shout. Formerly a counterweight to emotion, they are often now nothing but. The one thing they don’t do is count.

A number in the news is no longer a cold fact, it is a killer fact, with all the murderous zeal that word implies. Journalists everywhere know the meaning of the phrase, the dagger of detail that runs the opposition through: the 23% up! The £16m wasted! The 140,000 children!” . . .

How do we get away with it? In the first case because we have a number – and that beats thinking any time.”

Good stuff . . .

>

Source:
Why numbers no longer win arguments
Michael Blastland
BBC, April 2 2009

http://news.bbc.co.uk/2/hi/uk_news/magazine/7978822.stm

Category: Mathematics, Psychology

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

60 Responses to “Numbers, Damn Lies & Statistics”

  1. VennData says:

    An opinion about numbers. Ironic.

    The author sights a few examples of mistakes with numbers, he complains about numbers and finally, breathily states, “Numbers are often used without a sense of proportion.” To which I ask, well… how often?

  2. leftback says:

    Venn, it is cites, not sights. It’s investor, not inwestor….

  3. Eric Davis says:

    “Fascinating discussion on how basic marth discussions have been bastardized:”

    Math or Marth?

  4. leftback says:

    Here are some numbers to chew on. Bazza:

    U.S. Feb. consumer credit card debt falls 9.7% annual rate
    U.S. Feb. consumer credit falls $7.5 billion, or 3.5% annual

    Joe Sixpack is clearly not on a spending spree this winter.

  5. bman says:

    Some numbers are meant to be used without grasping, Take the number Zero for instance, how can you have something that is nothing, why even discuss it? Infinity defies proportions, how high is up? the common wisdom is twice as far as halfway up, but if you go up a ways, up is still twice as far as halfway up. Proportionality can be infinite, 22 divided by seven is considered an endless non repeating decimal, such that the proportion has been awarded it’s own name. And then there are imaginary numbers, those are some of my favorites like the boogy man who only comes out when the bathroom door is closed shutting out that last sliver of light, so the square root of -1 can turn an ordinary number into one of your worst nightmares. I know MBA’s never think of numbers this way. That may be one of their weaknesses, how else are you to have an imaginary bubble without knowing how far is up, or when the boogey man will finally arrive?

  6. Super-Anon says:

    Can we get XLF positive for the day?

  7. leftback says:

    @ Can we get XLF positive for the day?

    Want to buy more FAZ?

  8. Mannwich says:

    Time for the final push by the PPT (the feds and short-covering). Argghhh…..

  9. Bruce N Tennessee says:

    The statistics are going to show a negative consumer credit for the year….

    http://briefing.com/Investor/Public/Calendars/EconomicReleases/credit.htm

    Barry, has this happened before?

    Bruce in Tennessee….

  10. “Numbers are often used without a sense of proportion.” To which I ask, well… how often?
    –VD, above

    that’s funny, with that, no need to read the art, it isn’t like that field hasn’t been plowed..

  11. leftback says:

    There is no PPT today. We are short.

    bman: “I know MBA’s never think of numbers this way. That may be one of their weaknesses”

    Most MBAs only think of The Number. You know, the f*ck you number.

  12. Mannwich says:

    Hhhhm, negative consumer credit, unemployment fast approaching 10% (in reality probably 16%+), and we’re on the cusp of a recovery? Looks promising to me. Um, no.

    Here’s an even simpler way of putting it – we’re barely 6 months removed from the biggest credit bubble in the world’s history popping. That’s it. 6 months. Does common sense tell anyone that we’re going to simply snap back and recover that quickly? If so, then President Obama will deserve to be annointed The Messiah but fairy tales aren’t real, I’m afraid. More pain full steam ahead. Going to be a long, hot, cranky summer.

  13. Mannwich says:

    Here we go: Final 15 minutes into the close and like clockwork, we get a PPT rally. Happens almost every day lately.

  14. leftback says:

    Mannwich, no-one would ever know that you spend time lurking at Mish’s blog. :-)

    Bring on the earnings. Mustard seeds, baby !!

  15. Mortimus says:

    You absolutely nailed the first part

    leftback Says:
    April 7th, 2009 at 2:59 pm
    3pm ahead. Day traders should start covering soon.
    Typical pattern has been a brief rally at 3.15-3.45, then late selling.

  16. AmenRa says:

    Ok. Who was buying the S&P at 15:10 and 15:41? The S&P jumped $2.00 each time. ARGGHHH!!!

  17. Mannwich says:

    @leftback: Mish is in my regular rotation (w/TBP, CR, Naked Capitalism, Kedrosky, Macro Man, etc.) these days, but I mostly post my mindless comments here.

  18. Mortimus says:

    “Leftback Bottom”, “Leftback Top” and now the “Leftback Hour”

    All hail leftback!

  19. leftback says:

    @ Mortimus: Thank you, squire. A fluke, I am sure.

    It’s all down to the powers of observation.
    You can learn a lot by watching.

  20. Mannwich says:

    All hail leftback, indeed. We are not worthy, we are not worthy. Nice work. Maybe the idiots on bubblevision should have you on as a guest instead of “rising star” Dick Bove?

  21. Mortimus says:

    Pinpoint financial analysis with some humility, how refreshing!

  22. AmenRa says:

    1…2…3…TURNAROUND DAY!!! (aka a reversal on the 3LB). The daily trend (up) has been broken.

  23. batmando says:

    My rotation also consists of TBP, CR, Naked Capitalism, Kedrosky, Macro Man plus Jesse’s Café Américain, Denninger, David Fry, Hussman (Mondays), Epicurean Dealmaker.
    As if these were not enough, anyone have any other regular blog.spots to tout?
    None, however do I even attempt to follow the Commenters as I do at TBP where I find the most trenchant though sometimes opaque (MEH – ;^} comments.

  24. Outlier says:

    buried in Kedrosky’s site over the weekend was a comment that scared the heck out me, something to the effect of “my friends all say they are going to get out of the market for good just as soon as they get back to even”. That’s the crowd psychology for a long leg down if I ever heard one…

  25. batmando says:

    Well, no doubt, many likely will Sell in May and Go Away, regardless how close they’ve gotten back to even.
    Moi, I’ll likely exit sooner.

  26. leftback says:

    “Pinpoint financial analysis with some humility, how refreshing!”

    Here at Schadenfreude Asset Management we are big fans of the laconic style of Macro Man. FWIW, we cannot help but reflect that the “Karen bottom” and “Karen top” must surely be a far more attractive chart.

  27. Mannwich says:

    @Outlier: Many may actually start accepting they’ll never get even any time soon, so we may see selling accelerate here. Sell in April & May and go away.

  28. Transor Z says:

    Consumer credit dropping is hopeful. It’s the poor man’s (i.e., average American’s ;) )version of savings right now to pay down debt/cut up credit cards. Average consumer was spending 14% on servicing debt last year, more than on food. That had to change. Whatever the credit saturation point is it’s pretty clear we were way past it. Simply has to happen for the U.S. consumer to recharge and reload.

  29. DL says:

    leftback @ 4:17

    Has she revealed the “Karen top”?

    I haven’t seen it.

  30. Brendan says:

    I was watching a DVRed episode of Top Gear (BBC show) last night. The show, being about cars, often delves into the realm of numbers specified to accuracies far beyond a reasonable level of significant digits (543 horsepower cars… dozens of variables make that number barely accurate to two significant digits, much less three). The one host, when he doesn’t know something, just simply makes up an implausibly large number and states it confidently for comedic effect. The comedic effect is quite effective because it so closely mirrors the reality that pundits do the same thing (that’d be the damn lies part).

  31. Mannwich says:

    @Transor Z: I agree but how does the economy turn around if jobs are being lost and credit being decreased? How does this thing turnaround quickly? It certainly isn’t going to happen this quickly.

  32. AmenRa says:

    I forgot the name of the guest on Bloomberg but he said it’s good for the consumer to save and pay down debt…unless we are in a recession.

  33. leftback says:

    @ DL: Mere speculation on our part.

    Southern California…. sun, surf, sand… the mind runs riot.

  34. batmando,

    as always, if any Q:’s, let it be known–I, usually, have the necessary Windex.. ;

    as a side note, happy to see FAZ starting catch a *Reality s’nap:
    http://finance.yahoo.com/q/op?s=FAZ

  35. karen says:

    When the cat’s away, the mice will play… I will attempt to catch up on all this rot later… i’ve got miles and miles of beach to cover while the tide is out.

  36. Mannwich says:

    I wouldn’t bother, karen. Well, some of it is useful and informative. I let you decide for yourself. ;-)

  37. batmando says:

    MEH -
    Oft ’tis the idiosyncratic orthography, upon which you have been taxed heretofore by various and sundry, but we muddle through, smilingly 8^)
    http://en.wikipedia.org/wiki/Orthography
    “The orthography of a language specifies the correct way of using a specific writing system to write the language.
    “While “orthography” colloquially is often used synonymously with spelling, spelling is only part of orthography. Other elements of the field of orthography are hyphenation, capitalization, word breaks and punctuation.
    “Orthography describes or defines the set of symbols (graphemes and diacritics) used, and the rules about how to write these symbols.
    http://en.wikipedia.org/wiki/Comma
    “The comma is used in many contexts and languages, principally for separating things.
    “Uses
    The comma may be used to perform a number of functions in English writing.
    “Emphasis and clarity:
    Fowler’s Modern English Usage demonstrates an optional use of commas in the following sentences:
    * The teacher beat the scholar with a whip. A simple description.
    * The teacher beat the scholar, with a whip. For emphasis, as an expression of outrage; or to clarify that the teacher whipped the scholar, rather than the teacher beat a scholar who had a whip.

  38. batmando says:

    and, sometimes less is more, and vice verse

  39. par1 says:

    77.598% of statistics are made up and stated with a false degree of precision just to make a point.

  40. Transor Z says:

    @ Mannwich:

    Maybe if somebody discovers cold fusion in a garage laboratory. :)

    @ batmando:
    ,But, this,: http://www.youtube.com/watch?v=eAaQNACwaLw [The Obama Deception]

    and, more,:

    http://www.merriam-webster.com/dictionary/deception

    Sorry Mark! Affectionate kidding. Couldn’t resist.

  41. leftback says:

    @MEH: When half the site is filled with, so to say, Pastiche of your Ouevre, you have, clearly, arrived.

  42. Mannwich says:

    @Transor Z: Maybe we’d have a better chance of something like that happening if we weren’t wasting our precious resources and energy on propping up failing firms and industries so that we can just keep the status quo and go on like we did before?

  43. batmando,

    I hear you, certainly, no worries~

    though, be careful w/ wikipedia, they have a nasty habit of dumbing stuff down.

    see: http://www.thefreedictionary.com/orthography

    and, interestingly enough: “ACADEMY, in its modern acceptation, signifies a society or corporate body of learned men, established for the advancement of science, literature, or the arts.

    The first institution of this sort we read of in history was that founded at Alexandria by Ptolemy Soter, which he named the Museum. After completing his conquest of Egypt, he turned his attention to the cultivation of letters and science, and gathered about him a large body of literary men, whom he employed in collecting books and treasures of art. This was the origin of the library of Alexandria, the most famous of the ancient world. Passing by the academies which were founded by the Moors at Grenada, Cordula, and as far east as Samarcand, the next instance of an academy is that founded by Charlemagne at the instigation of the celebrated Alcuin, for promoting the study of grammar, **orthography, rhetoric, poetry, history, and mathematics. In order to equalize all ranks, each member took the pseudonym of some ancient author or celebrated person of antiquity. For instance, Charlemagne himself was David, Alcuin became Flaccus Albinus. Though none of the labours of this academy have come down to us, it undoubtedly exerted considerable influence in modeling the language and reducing it to rules.

    In the following century Alfred founded an academy at Oxford. This was rather a grammar school than a society of learned men, and from it the University of Oxford originated…”
    http://www.1902encyclopedia.com/A/ACA/academy-01.html

    though, correct you are, with the use of ‘ortho-’ (;

  44. AmenRa says:

    This is why I refuse to watch CNBC. Maria reports on Alcoa’s earnings saying that they beat estimates. Watch the look on her face as someone corrects her in her earpiece:

  45. lb,

    so others can join in.. http://www.thefreedictionary.com/pastiche

    Transor,

    btw, don’t miss this : Goodbye, Bill of Rights
    by Philip Giraldi, April 07, 2009
    Those who hoped that the change promised by candidate Barack Obama would include repeal of the various acts that have stripped Americans of their constitutional rights should be disappointed. Benjamin Franklin supposedly wrote, “Those who would give up essential liberty to purchase a little temporary safety, deserve neither liberty nor safety.” The citation is likely apocryphal, at least in terms of its attribution to Franklin, but it is useful shorthand for the unfortunate abandonment of many of the liberties guaranteed by the U.S. Constitution as a consequence of 9/11. The trauma of 9/11 created an opportunity for those seeking to centralize executive power, an objective of recent presidents from both political parties. ..
    http://original.antiwar.com/giraldi/2009/04/06/goodbye-bill-of-rights/

    and, as w/ batmando’s, no probs~

  46. leftback says:

    Ron Paul: speaking more Inconvenient Truth:

    http://www.youtube.com/watch?v=L0I9t11_dGw

  47. AmenRa says:

    I didn’t see this reported in the MSM today:

    http://www.financialpost.com/story.html?id=1471115
    Canada to split with U.S. on mark-to-market rule

  48. leftback says:

    …and there is this. Maria won’t be whispering this in your ear tonight (in between Twinkies):

    http://globaleconomicanalysis.blogspot.com/2009/04/treasury-to-delay-reporting-bank-stress.html

  49. lb,

    no doubt, Rep. Paul is one of the, all too, few that has any understanding of this Great Warning:

    “Friends and Citizens:

    The period for a new election of a citizen to administer the executive government of the United States being not far distant, and the time actually arrived when your thoughts must be employed in designating the person who is to be clothed with that important trust, it appears to me proper, especially as it may conduce to a more distinct expression of the public voice, that I should now apprise you of the resolution I have formed, to decline being considered among the number of those out of whom a choice is to be made.

    I beg you, at the same time, to do me the justice to be assured that this resolution has not been taken without a strict regard to all the considerations appertaining to the relation which binds a dutiful citizen to his country; and that in withdrawing the tender of service, which silence in my situation might imply, I am influenced by no diminution of zeal for your future interest, no deficiency of grateful respect for your past kindness, but am supported by a full conviction that the step is compatible with both. ..”
    http://avalon.law.yale.edu/18th_century/washing.asp

    or, for that matter, has even, honestly, thought of this thesis:
    http://thirdworldtraveler.com/Blowback_CJohnson/Blowback_CJohnson.html
    “…All this is almost too obvious to state-and so is almost never said. It is simply not a matter for discussion, much less of debate in the land of the last imperial power. Perhaps similar thinking is second nature to any imperium. Perhaps the Romans did not find it strange to have their troops in Gaul, nor the British in South Africa. But what is unspoken is no less real, nor does it lack consequences just because it is not part of any ongoing domestic discussion…”

  50. moneyneversleepsblog says:

    Slightly off topic but when you look at the numbers out today regarding dividend decreases vs increases it would appear that despite the negative headlines, most stocks did NOT reduce their dividend…

    http://moneyneversleepsblog.blogspot.com/2009/04/record-number-of-dividend-cuts-but-is.html

  51. Transor Z says:

    @MEH:

    I believe there are more instances of the abridgement of freedom of the people by gradual and silent encroachments by those in power than by violent and sudden usurpations.

    - James Madison, Speech in the Virginia Ratifying Convention on Control of the Military, June 16, 1788
    http://www.harpers.org/archive/2008/01/hbc-90002051

  52. Transor,

    see these catz: http://encyclopedia2.thefreedictionary.com/Fabian+socialism
    +UK socialist organization promoting research, discussion, and publication, founded in London in 1884. Its name is derived from the Roman commander Fabius Maximus, and refers to the evolutionary methods by which it hoped to attain socialism by a succession of gradual reforms. Early members included the playwright George Bernard Shaw and Beatrice and Sidney Webb. The society helped to found the Labour Representation Committee in 1900, which became the Labour Party in 1906. The Society has remained influential in Labour Party circles as a forum for new ideas and critical assessment, and all Labour prime ministers have been members of it, most recently Tony Blair and Gordon Brown.
    ~~
    and, http://www.fabians.org.uk/

    we’ve are our own doppelgangers..

  53. Transor,

    you should send me a *ping*, the WP Filter doesn’t like an important topic..

  54. paulyarbles says:

    22 divided by seven is considered an endless non repeating decimal, such that the proportion has been awarded it’s own name.

    Are you talking about Pi? Pi is not 22/7, it is, among other things, the ratio or the circumference of any circle to its radius divided by two. This ratio cannot be represented by the proportion of any two integers (that includes 22 and 7!).

    And then there are imaginary numbers, those are some of my favorites like the boogy man who only comes out when the bathroom door is closed shutting out that last sliver of light, so the square root of -1 can turn an ordinary number into one of your worst nightmares.

    A good way to think of these imaginary numbers is to think of them as pairs of regular ‘real’ numbers ( x, y ) with addition defined as:

    ( x1, y1 ) + ( x2, y2) = ( x1 + y1, x2 + y2 )

    and multiplication defined as:

    ( x1, y1 ) * (x2 , y2 ) = ( ( x1 * x2 ) – ( y1 * y2 ) , ( x1 * y2 ) +( x2 * y1 ) )

    Furthermore, we define all the plain old real numbers, x, we know and love as ( x, 0 ). For example, 42 is defined as the pair ( 42, 0 ).

    The we have, -1 is defined as ( -1, 0 ) and the square root of -1 is, therefore, ( 0, 1 ). Why? Follow the definition of multiplication above and we see that:

    ( 0, 1 ) * ( 0, 1 ) = ( ( 0 * 0 ) – ( 1 * 1 ), ( 0 * 1 ) + ( 0 * 1 ) ) = ( -1, 0 ) = -1 by definition.

    Now with that being said…

    F*ck the banksters! F*ck The Whore of Wall Street, Larry Summers. And God bless Barry Ritholtz and the many others doing the work of the Lord. Amen.

  55. bman says:

    @Paulyarbles, In some dimensions, I stand corrected, but I’m not sure if my imaginary number is scarier then yours.

  56. dead hobo says:

    BR thought:

    Numbers, Damn Lies & Statistics

    reply:
    ———————-
    You forgot Gozintas. These were first made popular by commodity magnate and mega-quant Jethro Bodine. He and his family were preoccupied with them. Mr Bodine was frequently asked to explain quant theory. He usually replied by reciting some Gozinta Theory. (2 gozinta 4 twice. 3 gozinta 9 three times.) Wall Street and major Hedge Funds continue to use the Bodine Models of Gozinta Theory as the basis for quant applications and timing of financial transactions.

    You also completely left out mathy graph stuff. A picture tells a story of a thousand words. People usually zone out on numbers and just about everyone but Bodine Theorists go blank faced when the formulas come out. But graphy mathy pictures looks cool, especially if they came from a recent version of Excel. Computers are smart, even though some people say differently. Experts do this for a living and they’re all rich from bonus money.

  57. dh,

    brings up a good point. an example of that ‘graphy mathy’ would be an eye opener to many peep.

    the tough thing is that I’m not sure if more paper was used in the Printing of those, would be, examples, or for the NDAs that preceded their release..

    past that, what’s more beautiful, to me, than than the truncated equations that were passed off as ‘insight’, are the ‘Blue Sky’ condition-sets/assumptions that they were predicated upon..

  58. dead hobo says:

    My “DH Always Accurate Predictive Quantifyer” (TM) states there is a pretty good chance the S&P will fall to new lows pretty soon. The people who claim a dip to 790 or 750 are only describing the journey, not the destination. Yesterday was only the crack in the dam forming. It’s going to be bloody hell, according to the mathy graph that supports the “DH Always Accurate Predictive Quantifyer” (TM) prediction. Qualifier: The mathy graph came from OpenOffice, not Excel, but it still looks cool.

  59. Thatguy says:

    Love this topic! The inability to comprehend statistics is widespread and includes NASA. So you can now add shuttle disasters to the list of other victims of innumeracy. Edward Tufte has some excellent examples of mathiness used in evaluating the risks to the Columbia shuttle. See the garbage that passes for analysis at NASA at the following link.
    http://www.edwardtufte.com/bboard/q-and-a-fetch-msg?msg_id=0001yB&topic_id=1

    They compared test results using a 3 cu. in. piece of foam to the actual incident which was 1920 cu. in. of foam. Does anyone here think that test results that were based on something 640 times smaller than the actual could in any way shape or form be applicable?