Lies, Damn Lies and Anecdotes

“Lies, damn lies and statistics” is a phrase used to disparage the persuasiveness of statistics.  Anybody who has worked with statistics even a small amount know how numbers can be massaged to fit the biases of the ones doing the massaging.  I’ve seen it firsthand in the use of business statistics and we’re all getting a taste of it in the field of science with the e-mails uncovered a few weeks back in Climategate.

I have learned to be very skeptical of statistics, even statistics that support my own intuitions and beliefs.  Usually, with just a little poking, I can find problems in the data that damages the validity of any conclusions drawn on the analysis.

But, while statistics can often be used to persuade the logical mind who has not yet come to appreciate problems in data, anecdotes are even more dangerous because they are used to persuade the general public, especially in journalism.  Statistics are just numbers on a page.  Go find one of those numbers and show what it means and the persuasive factor has increased by several multiples.  A picture is worth a thousand words.

Just about every news story uses real life people to bring points the reporter wants to make alive.  That’s entertaining and interesting, but often this is abused because the reporter neglects to balance the stories with anecdotes form others and gives a distorted picture of reality.

Advertisement

How Government Grows

Government is stuck in a positive reinforcing loop, which means that just about anything is used to justify more government.

Consider the attempted terrorist attack on the Detroit flight.  We will likely be told that we need to fix it so that won’t happen again and that will mean more government.

Or, think about the mortgage crisis, which occurred due to large part to government intervention (though most people don’t recognize this).  The crisis is incorrectly considered a market failure that must be mitigated with more government.

How about health care?  As with mortgage crisis, the market for health care has been heavily damaged from government intervention.  Again, this damage is incorrectly attributed to a market failure.  Naturally, we need more government to fix it.

In all three cases above, the pattern is the same.  Something bad happens, be it viewed as a government or market failure and more government is proposed to fix it.

Global warming was sold as a problem, even though it doesn’t appear that the certainty of mankind’s influence on it is as clear cut as the believers have stated.  Either way, more government is sold as the answer.   Even if it’s not clear, “we don’t want to take any chances.”

It doesn’t just happen with bad things.  Even in good times government grows.  There’s always some perceived inequity that someone thinks needs fixing through government. Plus, if everybody’s doing well, who notices if the government has gotten a little bigger?

Consider US government spending from 1994 – 2000, arguably a pretty good time.  Federal government spending increased by 26% while inflation increased by 16%.  During this time, we also reduced military spending and entitlement spending.  Without these reductions, government would have even grown faster.

Or how about 2001 – 2006,  another time frame with good times.  Federal government spending increased by 44% while inflation increased by 14%.

Intuitively, I don’t buy that government is a good way to solve our problems.  The problem is that government activities are judged based on their intentions, not their results.

This Econtalk podcast, Wrinston on Market Failure Government Failure, supports my intuition.  Clifford Wrinston, of the Brookings Institution, took a look at a wide body of research on government in his book, Market Failure versus Government Failure (available for free online).  I highly recommend the podcast.  I will be reading the book over the coming weeks.

Make no mistake.  I know there are failures in the market too.  Neither the government or market is perfect.   However, failures in the market are like cancers that have their blood supply choked off – they die off.  Failures in government work the opposite.  Those cancer cells attract more blood supply and keep growing.

Dennis Prager is on to Something

Dennis Prager’s column, Thank You to These Businesses and Products, is a good reminder that we should be thankful for how good we have it.  As a society, we are excellent at whining about our problems but, not so good at recognizing the things that make our lives better.

Here are some of the things I can about that have helped the quality of my life in the last few days:

• The Realtime 4-wheel drive on my Honda C-RV made it easier and safer for us to get to and from work and visit family over a snowy Christmas weekend.
• The local tire store was able to fit us in on short notice and put new tires on my other car right before the snow.
• Plastic disc sleds and a snow shovel produces hours of entertainment for my family in building a sled run in our backyard.
• The mapping software on my iPod Touch, connected via wireless to the Internet through my AT&T Uverse service, and a Sprint cell phone allowed me to help my wife find a safe route home during blizzard conditions.
• Grocery stores open for our convenience, stocked full of food and household items.
• The Wii game console which has turned my living room into a bowling alley.
• Band-Aids, a bottle of hydrogen peroxide and anti-biotic ointment that allowed me to administer first aid on a minor break in my skin that was starting to become infected.  Now, a day later, it’s healed.
• The people who made all of the stuff in my house that makes a much cozier environment that one that exists just a few feet away during a blizzard.   The roof keeps us dry.  The walls keep out the wind.  The insulation keeps out the cold and noise.  The furnace and natural gas extracted from deep within the earth keeps it warm inside.

Those are just a few things that come to mind.  Every minute of my day I come into contact with something that makes my life better.  I like Prager’s resolution to keep that in mind and discuss those things.

Dave Barry on 2009

I enjoyed this 2009 recap from Dave Barry.  I found the recap of the first half of the year better.  Perhaps insanity becomes more clear a few months removed.

From January:

The No. 1 item on the agenda is fixing the economy, so the new administration immediately sets about the daunting task of trying to nominate somebody — anybody — to a high-level government post who actually remembered to pay his or her taxes. Among those who forgot this pesky chore is Obama’s nominee for Treasury secretary, Timothy Geithner, who sheepishly admits that he failed to pay $35,000 in federal self-employment taxes. He says that the error was a result of his using TurboTax, which he also blames for his involvement in an eight-state spree of bank robberies. He is confirmed after the Obama administration explains that it inherited the U.S. Tax Code from the Bush administration.

I really this passage about January and February:

In entertainment news, an unemployed California mother of six uses in-vitro fertilization to give birth to eight more children, an achievement that immediately catapults her to a celebrity status equivalent to that of a minor Kardashian sister. But even this joyous event is not enough to cheer up a nation worried about the worsening economy, which becomes so bad in . . .

FEBRUARY

. . . that Congress passes, without reading it, and without actually finishing writing it, a stimulus package totaling $787 billion. The money is immediately turned over to American taxpayers so they can use it to stimulate the economy.

No! What a crazy idea THAT would be! The money is to be doled out over the next decade or so by members of Congress on projects deemed vital by members of Congress, such as constructing buildings that will be named after members of Congress. This will stimulate the economy by creating millions of jobs, according to estimates provided by the Congressional Estimating Office’s Magical Estimating 8-Ball.

Another from February:

The stock market hits its lowest level since 1997; this is hailed as a great investment opportunity by all the financial wizards who failed to let us know last year that the market was going to tank.

From March:

. . . an angry nation learns that the giant insurance company AIG, which received $170 billion in taxpayer bailouts and posted a $61 billion loss, is paying executive bonuses totaling hundreds of millions of dollars. This news shocks and outrages President Obama and members of Congress, who happen to be the very people who passed the legislation that authorized both the bailouts and the bonuses, but of course they did that during a crisis and thus had no time to find out what the hell they were voting for.

Fun stuff.

Barry drills home the Geithner absurdity and “inherited from the Bush administration” excuse throughout.

As I read it, it occurred to me that while Barry is a good humorist, the funniest stuff in his recap didn’t need much help looking remarkably stupid.  And we accept that.

Sarah Palin Sensationalism

She must be a person people love to hate.  When I post about her, the traffic on my site goes up.  My last post about her generated about 10 times more views than any of the other posts in one day.

That makes me curious.  What is it about her that people love to hate?  Further, why do people beat on her so much? 

Consider, for instance, the fact that she wore expensive clothes provided by McCain’s campaign during the campaign.  That’s presented as if there’s a tinge of scandal.  It seems to grate people the wrong way.  Yet, I don’t recall any mention of who provides the other candidates’ campaign clothes or how much those clothes cost.

I do remember a story after Obama took office about the tailor who makes his suits and the designers that make Michelle’s clothes.  The tailor sounded very exclusive and I’m sure his suits aren’t cheap as did the designers for Michelle’s clothes. 

Yet, reporters don’t ask how much Obama’s or Michelle’s clothes costs or who pays.  Rather than a scandalous angle, the clothes story was presented as a human interest story.   

Personally, I could care less about anyone’s clothes, but the fact that there was such dramitcally different treatments in the media about the same story says a lot to me.  It should to you as well.

Don’t celebrities where free clothes?  Why isn’t that a scandal?  Do they need free clothes?  Can’t they afford their own?  Nope, it’s just a scandal when there isn’t much else to scandalize about someone we dislike.   When we can’t find something, we sensationalize.

I’ve heard more about Sarah Palin’s campaign clothes than Obama’s ties to ACORN.

I’ve heard more about the fact the Palin didn’t tell us which magazines and newspapers she regularly reads (do we know which Obama, Biden or McCain read?) than Obama bailing out Wall Street billionaires.

I’ve heard more about Tina Fey’s – as Sarah Palin and often attributed to Palin – comment that she can see Russia from her front porch than Obama following the path set by Bush in his last term rather than bringing the “change” people voted for.

Infinity Padlock

What was that game we’d play as kids when you wanted to lock something in so the other person couldn’t change it?   You might tell your friend that you’re good at something.  They reply, “I’m better.”  Then, you say, “I’m the best! Infinity padlock!”  I think.

Anyway, looks like Senator Harry Reid is playing that game with the health care bill.

Good Writing on Health Care

If you are having trouble figuring out what health care reform is all about, Scott Gottleib sums it up well in his piece entitled Obamacare: No Exit at the American Enterprise Institute for Public Policy Research.

In effect, the plan creates a single national health-insurance policy. Consumers’ only real option is to trade higher co-pays for lower premiums. But we’ll all get the same package of benefits established by a series of new agencies and an “insurance czar” seated in Washington.

Steve Forbes on the Crisis

In his December 10, 2009 Fact and Comment column, In-Credit-Able, in Forbes Magazine, Steve Forbes clearly communicated several points worth capturing.  Here’s on on the mortgage crisis:

Government-sponsored enterprises Fannie Mae ( FNM – news – people ) and Freddie Mac ( FRE – news – people), with their implicit government guarantees, were able to totally dominate the mortgage market. They could borrow cheaply and leverage up on a scale no private company could. When they went bingeing on subprime mortgages, they ended up twisting and then destroying the housing market. The private sector was quite capable of generating players that could have performed Fannie’s and Freddie’s roles. And because they wouldn’t have had Uncle Sam’s moral-hazard safety net, they would have been infinitely more cautious, even with the Fed creating floods of liquidity and the credit rating agencies forgetting their raison d’être. Yet Congress is determined to keep these beasts alive and under government sway. Washington is also taking over the student loan market.

This is not a well understood point.  Having the implicit guarantee of the government short-circuited the prudence that would take place in a free market.  All the bright bulbs that condemn free markets for causing the crisis, don’t seem very bright to me because they not only miss the true cause of the crisis, but they blame the very thing that could have prevented it.  Removing prudence from a free market through a government action will always end badly.

Here’s some clear thinking from Steve on health care:

The prospective government de facto takeover of health care will extend Washington’s reach into the credit markets. Health insurers will be reduced to federal vassals by being forced to offer policies at prices and terms dictated by Washington. As a reward they will have first call on the credit markets, with the same sort of implicit guarantees that once so benefited Fannie and Freddie.

It’s easy to forget, businesses like insurance companies are in business to make a profit for their shareholders.  If they don’t make a profit, there’s nothing forcing them to stay in business.

Walter Williams on Education

In his column today, Black Education, Walter Williams touches on some of the same things I touched on last April in my post on how to save education.

They have parents with little interest in their education. These students not only sabotage the education process, but make schools unsafe as well. These students should not be permitted to destroy the education chances of others.

I agree for any student that is disrupting others.  Education is expensive.  We pay $10,000 – $15,000 per student per year of K-12 education.  In return for spending this money, we should expect students to be on their best behavior and problem kids need to be removed from the population so other can learn.

Another issue deemed too delicate to discuss is the overall quality of people teaching our children. Students who have chosen education as their major have the lowest SAT scores of any other major. Students who have an education degree earn lower scores than any other major on graduate school admission tests such as the GRE, MCAT or LSAT. Schools of education, either graduate or undergraduate, represent the academic slums of most any university. They are home to the least able students and professors. Schools of education should be shut down.

This goes along with my belief that we need to remove bad teachers and reward good ones.  Teachers seem to hate the idea of performance measurement.  It’s not hard to see why based on Williams’ paragraph above, they aren’t that good.  Teaching is not an entitlement.

Yet another issue is the academic fraud committed by teachers and administrators. After all, what is it when a student is granted a diploma certifying a 12th grade level of achievement when in fact he can’t perform at the sixth- or seventh-grade level?

Agreed.  In my post, I wrote that teachers need to assess accurate grades that truly reflect the students’ proficiency of the subject matter.  There should be no other criteria when giving a grade.

In summary, public education is not good because it has stifled or simply has wrong-headed ideas on several important levels of feedback.

1. Student grades.
2. Student behavior.
3. Management of teacher quality.
4. Ultimately, the most important level of feedback that is stifled is funding.  Public education receives funds no matter what.   #4 enables #1 – 3.

Sarah Palin on Oprah

I finally got to see Sarah Palin on Oprah.  Decent stuff.  I noticed the same thing that several conservative talk show hosts noticed as well, there was no shots of the audience.  The way it was edited, it seemed like there was no audience at all.  I’d be interested to know the real story on that.  Conservative talkers seemed to think Oprah didn’t want to show an audience full of people nodding in agreement with Sarah.

Here are a few observations I have.

1.  People need to wake up to the heavily clouded media lens. If you haven’t seen this Oprah, watch it and listen closely to Sarah’s side of story about the Katie Couric interview.  The journalistic standards in the country are very low.  I’m not saying that Couric should have taken it any easier on Palin.  But, an honest viewer has to see that the media did take it much, much easier on Obama and Biden to the point of propaganda.  I think only now, a year later, the media is starting to fidget with the idea of asking Obama some tough questions.  All you need to do is simply imagine if Palin or Bush would have been remotely tied to an organization like ACORN.  We would have heard the end of it.

2. Would-have, could-haves. When Palin explained her side of the story about her response to Couric’s question about what specific magazines and newspaper Palin read, I believe her.  She said she was frustrated.  She thought it wasn’t a question that would have been asked any other candidate and felt it was an insult to her and Alaskans.  Oprah did us a service in showing that footage from the Couric interview and Palin’s story fits with the reaction and body language I saw.  If I could do it over again for Palin, I’d just simply have turned the question around on Couric.  What magazines and newspapers do you read?

3.  Recommendation for Palin. Figure out how to clearly communicate why you stepped down as Governor.  Whatever it is that she’s saying doesn’t come through well.  I can’t tell if it’s because the attention that followed her from the campaign was hindering her ability to lead Alaska’s government or if she felt she could have a bigger impact in the U.S. in a private role.  Whatever the reason, it still isn’t coming through in a compelling fashion.

4.  Oprah? Oprah was harping hard on the degree to which Palin said she was handled during the campaign, like how she was scripted and clothes picked out and provided for her.  Oprah.  Wake up.  Your guy is handled as well.   He doesn’t pick out or pay for his suits.  Michelle doesn’t either.  He has a team of speechwriters, consultants, stylists and advisers to make him and her appear as they do.  Oprah, look at yourself, you don’t do all the work to make you look good all by yourself.  You have a rather large team to make it all happen.

But on the other, I think the handling is telling of our society.  Politicians are products.  They are made up by polls and focus groups. They are, generally, who we want them to be (or who their consultants think we want them to be).  They’re phony.  It would be refreshing to see a real person running for office.  I would love to hear a politicians say, “This is what I believe in, this is what I’m going to do, this is what you’ll get if you vote for me.  If you don’t want those things, vote for the other candidate.”