Wednesday, 2 November 2011

How to call bullshit on statistics. e.g 2

This article has got a lot of press coverage as well. It contains a startling claim:

Goodall says, "our total use of materials [in 2007] was almost the same as it was in 1989, despite the economy having tripled in size in the intervening years

This falls into the A Second's Thought Should Tell You It's Wrong category.

A tripling of the economy in the years from 1989 to 2007 would require a growth rate on average of 3^(1/18)-1 which equals 6.4% per year, every year. I'm not going to look up the data, but I'm pretty confident the UK hasn't grown that fast in a year in the past 30 (and hardly ever - perhaps the Barber boom peak?). In fact between those years UK GDP rose by 59%, a rate of 2.6%.

So what does he mean? I know where the figure comes from - it is true that UK nominal GDP rose by 3 times between 1989 and 2007. Clearly this was mostly inflation, ie a rise in prices. There's no reason why a rise in prices should require more 'stuff', and of course to use such a figure is completely wrong.

To be fair to the academic, it might be a journalistic or sub-editing error as the original paper doesn't contain the statistic.

Tuesday, 1 November 2011

How to call bulls**t on statistics. e.g 1

I'm good at spotting dodgy statistics, and I thought it might help me and others in listing the ways you can spot them (which I'll do as they occur to me.

This has been doing the rounds:

A couple of years ago, there were more [Porsche] Cayennes circulating in Greece than individuals who declared and paid taxes on an annual income of more than €50,000, a figure only slightly above the vehicle’s list price

Now, what rings the alarm bells here? It's not the source, which seems respectable enough. It's also not the overall feel of it, as we know Greece has a problem with richer taxpayers declaring income. It's not even the slightly odd comparison of a stock (Cayennes in Greece) with a flow (income per year). There is the niggling concern that this allows us to laugh at foreigners, but the author is a foreigner so we'll let that pass.

No, what makes it require further checking is the specificity of it. For unless Cayennes' have an extremely high market share of the luxury sector, which would in itself be unusual*, if there are more Cayennes in Greece than €50,000/year taxpayers, there must be loads more other luxury cars: Porsches, Ferraris, Mercedes, BMWs, and so on. So why not say that to make the point about tax evasion?

So let's do some checking. We find there are statistics on Greek Cayenne sales. For example in 2005 there were 278 sold. In 2007 265.

In total since its launch in 2003 (in Greece, 2002 worldwide) a rough (I've not used a calculator) figure is about 1,700 sales. This is less than 0.1% of the market in this period, I think, possibly less than their UK share (but I can't find figures for those).

So on the face of it, unless there are exceptionally few taxpayers over €50k**, the statistic looks false (and if there are, why use Cayennes as your comparison?). There might of course be factors I do not know about - secondhand imports, non-official sales, or maybe I've made a mistake. After all the author of the piece is Greek. But it was the Cayenne bit that seemed wrong.

* Also Greece is surely hilly, and in places will have bad roads, so the idea of buying a Cayenne is not as ludicrous as the author suggests. But then again he is from the country.
** Of course this is the other way to look at it, how many taxpayers are there? I could only find statistics of 5,000 over €100,000, which is obviously a low figure but more than the Cayennes. And there would be many times (10? 20?) more taxpayers over €50,000 than €100,000.
Nb: Author also mentions a certain town, the region of which it is in reported only a handful of Cayenne sales in those years.