Flashback - Extending Unemployment Benefits

[Early in 2012 I used a question about the motivational aspects of unemployment benefits to show how sloppy news organizations are about data gathering. This kind of "research" continues to this day without being challenged, while Congress raises the issue of further extending unemployment benefits in light of the coronavirus lockdown. ]

First, this is not about the pros and cons of extending unemployment benefits. It’s about using critical thinking to deal with the information we receive on any subject. This just happens to be a good example. 

At the end of this CNN Money article they ask: “Do you receive unemployment insurance? Have you not been looking for a job as hard because you are getting benefits? Email [address] with your contact information and you could be contacted for an upcoming story or video.”

Two thoughts. As I have pointed out many times before, testimonials or anecdotes are not evidence. These reporters will receive e-mails and sort through them probably to find ones to support the story they want to tell. Second, even if they condensed the information received and delivered a summary, this is an extremely poor method of sampling. Their data would not be representative and any statistical conclusions would be meaningless. How many people do you seriously think will e-mail to say that they are just sitting around until their unemployment runs out, making no effort to find a job?

This practice of finding an individual example and selling it as the plight or experience of many is common among reporters, politicians and advertisers. They want to put a face on the crisis, but it borders on deception. Often the purpose is to gather support for a cause or product by eliciting an emotional reaction from the viewers or voters. It steers us away from the kind of critical thinking and analytical problem solving required to get us (the US) out of the mess we are in.

[By the way, if I had been inclined to write about the motivational effects of unemployment benefit extensions, I need look no farther than a National Bureau of Economics Research working paper in 2015 after the recession. Surprise, surprise! They estimated “the abrupt end of unemployment benefit extensions led to 1.8 million additional new US jobs....”, that is, new workers!]

How to Think About Survey Results

The USA Today runs a daily feature called USA snapshots.  They are "easy-to-read statistical graphics that present information on various issues and trends in a visually appealing way," addressing a particular issue in a number of different subject areas including politics, money, sports, news and entertainment.  They sometimes refer to a current news item, movie release or sporting event, but the rest of the time they are just random subjects.  They do provide some good examples for the practice of critical thinking.  (Anyone can review a large number of these simple graphs by searching on the Internet for USA snapshots.)

When looking at these graphs and pie charts or any others it's important to consider a couple of questions.  What type of question is being asked, and what is the source of the data?

One category is facts or statistics.  These are easy to look up and verify.  The source of the information may be government or industry records.  Some typical examples from from the daily inserts:  NCAA Division I all-time scoring leaders, top grossing superhero films, most popular cosmetic surgery and soft drink consumption trends.  The first two are straight out of the record books, so to speak.  The third comes from the American Society for Aesthetic Plastic Surgery and presumably they should know.  The soft drink information comes from "Beverage Digest," another reasonable source.

Another category relates to choices or behavior.  They ask people whether they have ever come in late to work or left early knowing that the boss was out of the office.  The sample of 507 workers is not particularly large, but they should know if they have ever done it and may be willing to honestly confess to it.  It is a little puzzling, though, that the pie chart shows 3% who answered "Don't Know."  A question for 1383 adults who have had allergies for more than 3 years asks whether they stick to the same brand of allergy medicine or tend to switch around.  The primary problem with behavior questions like these is that they are self-reporting.  There is no safeguard against lying or  exaggerating.  This is especially a problem as questions get more sensitive and personal, such as the use of drugs, criminal behavior, smoking, drinking or sexual practices.  The above questions seem innocent enough that people wouldn't be inclined to falsify and even if they did, the  consequences of a bad survey result are small.

Other surveys deal strictly with opinions.  Like the behavior category the self-reported nature of the answers is always problematic in that they are not verifiable.  We must take the word of the individuals.  That is something always to keep in mind.  The graphs in this category ask questions like how many episodes of binge TV viewing are too many - asked of 800 people who admitted to watching at least 3 TV episodes in one sitting.   PETA asked 1,234 New York City voters if they favored or opposed the banning of horse-drawn carriages in the city.  Be careful of this result since we don't know how the question was couched, that is, what questions were asked to lead up to it (setting the mood) and how exactly was it worded?  Because it was a PETA survey, it is reasonable to suspect that they favor a particular answer.  (FYI, most opposed the ban.)

Finally, there is a category that seems like an opinion, but it's hard to determine the basis for any opinion on the subject.  A LoanDepot survey of 1000 adults asked if it was easier or harder to get a mortgage today than it was a year ago.  Do people apply for mortgages every year?  That seems unlikely.  It doesn't even specify that these adults were in the process of applying or had applied in the recent  past.  Who are these people and where are they getting their information that forms the basis of such an opinion?  Yet, more than half (78%) had an opinion while 22% answered, "not sure."  This is truly puzzling and perhaps disturbing that so many people form opinions on "gut feel" or, believing that they should have an opinion,just make one up.  On this subject it's harmless enough, but are there implications for bigger issues?  Likewise, it's a problem that the organization doing the survey and the paper printing it don't question it.  How many people would be inclined to form their own  opinion,  based on the opinions of others that were based, in turn, on nothing substantial?  In a democracy where lawmakers follow poll results so closely, it's scary to think about.

Figures Don't Lie, but...

Last time I was enthusiastic about a sign of better discipline among Americans, that 84% of those receiving income tax refunds planned to use them to pay down debt according to a Bankrate article.  Although I hate to put a damper on such good news, I may have to rethink my position and should surely have been a little more careful.

Since this is the week of the tax deadline, other articles and statistics also appeared along the same lines.  From the USA Today/Gannett on Friday (April 11), the chart shown here tells a different story.  About 58% intend to pay down debt or save the refund.  This is more than half, but quite a bit less than the 84% from Bankrate.  This information looks reliable with references listed as: Internal Revenue Service; H&R Block; Tax Foundation; Tax Policy Center; Bankrate.com; Giving USA; Center on Budget and Policy Priorities; Pew Charitable Trusts.

A few days later on April 15, another small box ran in the USA Today with this information based on a Capital One Bank survey of over 1000 people.  Now only 40% intend to save a majority of it and 42% show up as spenders.  What’s up with all these discrepancies?

The lesson for me and for all of us is one I covered way back in October 2011.  Surveys and polls cannot be totally trusted.  Even if they have an adequate sample size and the professional pollsters have gone to great lengths to ensure a representative sample, other problems may still arise.  When self-reporting, people are not always honest.  Sometimes they want to impress the questioners, as it could be in this case, or even shock them, as may be the case with drug polls of teenagers.  Even when they are trying to make every effort to be honest, the wording of the polling question can influence people – choice of words or introductory phrases can imply the intention of the question.  The order in which the survey presents the questions can develop a mood or a pattern.  Outside events or experiences also can influence the mood or opinion of the survey subjects, for example, opposition to gun ownership peaks shortly after a highly publicized shooting incident.

I’m glad many people are making responsible decisions about the use of their tax refunds, but in retrospect, I’m really not sure if it’s a majority or not.

Changing Direction for Improvement

I mentioned the change process on December 12, 2011, but I’ll give more details today to tie that theory to the subject of these blogs.*

Change happens only when there is sufficient discomfort, dissatisfaction with the status quo.  If I’m happy with the way things are going, I have no incentive to change and will resist.  My attitude will be, “If it ain’t broke, don’t fix it!”

With dissatisfaction comes a demand for change.  Then someone must present a solution consisting of three factors:  a model, a plan and a cost.

The model says, “Here’s where we would like to be.”  Contrasted with the current state, the model or desired state will yield better results.

The plan then outlines steps to get there.

Finally consider the cost. If a solution is too expensive, a new one must be found.

One simplified example is planning a vacation:

1. Discomfort = you do not want to spend a vacation sitting at home; it’s not exciting enough or restful enough or fun.

2. Model = pick a destination and timeframe that will satisfy the needs identified in step one: theme park, beach, cruise, spa, golf resort, etc.

3. Plan = pick dates, decide whether to drive or fly, make reservations, etc.

4. Cost = check the budget to make sure you can afford it, otherwise you must modify the plan.

The approach to improving America is the same.  For the past 30 years survey after survey has shown dissatisfaction by the majority of Americans with “the direction of the country.”  The 2008 presidential campaign played on this dissatisfaction with a theme of “hope and change,” but recent survey results are unchanged.  It seems there is sufficient dissatisfaction but still no clear model or plan (and the cost keeps going up!).

This blog is about a model and a plan that works.  For over 10 months I have shown how real American solutions are based on our personal behavior in five key dimensions.  Our behavior is the primary source of most problems. Individual consequences accumulate into societal woes.  With almost 90 examples as background, I trust you are beginning to recognize in the news and in your own experience other examples of behaviors that fit into these dimensions.   More positive behaviors yield better consequences; no change in behavior yields what we have now, or worse.

The plan is to recognize these behaviors and start to eliminate destructive ones in favor of positive ones.  The sum of individual behaviors and their consequences build to societal consequences, i.e., our national problems and crises.  When we persuade a “critical mass” of citizens – not everyone, but enough to make a difference – we will begin to change the direction of America.  This is the desired state, more positive consequences and fewer crises, with people depending on themselves (not government or big business) to bring about the improvement.  (If we can’t achieve that critical mass, it means not enough people care enough to change, and we should expect more of the same.)

Surprisingly cost is not a factor.  It costs nothing to eat less and exercise more (discipline).  It costs less to forego the latest fad item - be it a fancier car, tennis shoes, designer fashions or the latest phone - to appreciate what we have and not always be grasping for more (perspective).  It costs less not to throw away money on unproven medical cures (critical thinking).  It costs nothing to admit and take ownership of our errors and problems and teach our kids to do the same (responsibility).   We support wiser and less wasteful decisions by recognizing that you don't get something for nothing, that there is no magic (government or corporate) source of free money (understanding the economic cycle).  Look at all the examples in previous blogs.  None requires an investment beyond improved behavior in those five key dimensions and doing so leads to happier individuals and a better overall America!

 *Change discussion was adopted in part from my book, No-Secrets Leadership.

More Americans Saving Tax Refunds

Here is some good news for the future of our society.  Yahoo! Finance reports that more Americans are planning to save at least part of their tax refunds than did so in the past nine years.  Others plan to use their refund to pay down debt.  Less than one-quarter expects to use it on splurge spending or a vacation.  Another survey mentioned in the article found similar results.

People have been known to give one answer to a survey and act differently (see blog from October 7, 2011), but if this one turns out to be true, perhaps fewer people would be living on the edge, paycheck to paycheck, in danger of default.  It’s good news not only for them, but for everyone.

Economic understanding about the flow of money tells us that when people are unable (or unwilling) to pay their legitimate debts - credit cards, auto loans, mortgages, or whatever - the rest of us must take up the slack.  Banks adjust interest rates, penalties, fees and their willingness to approve loans to make up for the added risk posed by these deadbeats.  The same reasoning applies to tax evaders who settle for “pennies on the dollar” or, for that matter, to shoplifters.  Those losses don’t go away or come out of some mysterious pot of money or some magic insurance policy with no premiums.  They are made up for out of your pocket and mine in the form of higher prices, premiums, taxes and fees.

So this expected increase in responsible behavior from some is good news for all.  (This example shows how more positive behavior by individuals in any of the five key dimensions moves America as a whole in the right direction.)

Surveys and Critical Thinking

The news media seem obsessed with survey results, people telling us what they think or how they feel.   Being a critical thinker (at least most of the time), I take the results of these self-reporting surveys with a grain of salt.

I am skeptical for several reasons.  It is easy for organizations to word survey questions with the intent of influencing the answer.  People often want to impress the survey taker.  Most surveys leave no room for follow-up or clarifying questions.  The sample surveyed is often done with convenience in mind or is otherwise not properly designed.

I have seen survey questions that are preceded by a paragraph about how terrible or how wonderful a particular practice or policy is.  They then ask if you favor continuing the policy.  It’s important to see the entire question before judging the validity of the answer and brief news stories often omit this information.  In a similar vein, how many times has a salesperson told you directly that anything less than “completely satisfied” on the follow-up survey will reflect badly on the store?

Sometimes people just want to show the survey takers how cool or clever they are.  They try to guess at the desired answer or try to position themselves in the right group.  There are many examples where married couples are questioned separately about something they do together:  housework, managing the finances, general decision making, who disciplines the children or frequency of sexual activity.  Invariably discrepancies appear between the answers of husbands and wives, discrepancies that can be explained only by a misperception or an attempt to give a favorable rather than an accurate answer.  Apply this to teens self-reporting on tobacco or drug use.  Are they being honest or exaggerating?

Some surveys give a choice of answers, but perhaps none fits the exact situation.  I have received many customer service surveys that leave me scratching my head because I did not experience the service they ask about and there is no “Not Applicable” option.  I can’t give them the correct answer and there is no way to clarify.  The same can be true with public opinion questions.  My “10” or “completely agree” may differ, not from your experience, but from your definition of these terms.

Finally, there are people who, either purposely to influence the outcome or through negligence, survey an incomplete or biased sample.  I sometimes get unsolicited phone surveys, which I hang up on.  I wonder what they do next.  Do they get someone else from their list with the same demographics (and how do they know my demographics anyway?) or more likely, do they just go to the next name on the list?  Sometimes they survey likely voters and sometimes just registered voters.  It makes a difference.

So I take these reports in the news less seriously.  When I hear that consumer confidence is slipping, it’s interesting, but not as reliable as the retail sales numbers at the end of the month.  What people say and what they do often differ.