Monday, September 19, 2011

Critical Thinking and Tricks with Numbers.

Sometimes we become lazy.  Politicians and news agencies will take advantage of this laziness in their use of statistics to reinforce their point of view.  There is a saying, "Figures don't lie, but liars can figure."  People collect and report all kinds of numbers for many purposes, sometimes purposely representing them in ways that favor or discourage a particular conclusion.

They talk about x% growth or y% losses or cite hard dollar numbers. You may not be given all of the facts.  Several techniques may be used to color the message.

If a company had a profit of $1 million this quarter up from $500,000 last quarter, but down from $2 million for the same quarter last year, a reporter can get sympathy for the company by talking about a 50% reduction (from last year). That could also mean a drop from $2 billion to $1 billion or from $10 to $5; we don't have all the facts.  If he wants to give the opposite impression, he says that profits doubled from last quarter or simply that they made $1million.  (A million dollars is still a lot of money in most people’s minds.)  When the media or politicians want to arouse anger against large companies they talk about profits in the billions without giving any perspective about relative costs or prior performance.  When companies report their own numbers they can use similar tricks to evoke the opposite reaction.

One of the worst abuses is to talk about a reduction in growth and call it a cut or a loss.  It may be less than someone expected, but it’s clearly not a cut.  To deliver a message of economic gloom, news reports state that the economy grew at a slower rate – but growth is still growth.  On the other hand, if they want us to feel encouraged, they emphasize the growth – same numbers, it's all in the presentation.

Another trick to make savings look bigger is to state it over a longer period - they'll spend today, but pay for it with reductions over the next ten years.  On the other hand, when someone wants you to spend or donate money they go the other way – "that's only pennies a day," but pennies a day can add up to over $300 a year.

When fundraisers want to make an impact they will tell you that someone dies of a particular disease every 6 minutes. That is much easier to identify with than 87,600 deaths per year.  People can get lost in the crowd thinking about numbers that big, and with 300 million people in the US, that's less than 3/100 of 1%, which paints not nearly as impressive a picture as one person dying every six minutes, a tactic clearly designed to get you to change some behavior or donate to the cause.

These tactics of packaging numbers are very common, which makes Critical Thinking crucial as both as a tool for getting at the truth and as a defensive weapon.

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