Why some people have such a unabiding faith in statistics astounds me.

Maybe it’s because most graphs are depicted on such an official-looking piece of paper and draw with such care.   It’s still my opinion and experience that statistics is more of an art than an exact science, and it’s obviously always backward-looking in an attempt to predict the future.

There is a benefit to any statistical analysis of course in that it gives us a general idea of whether we’re on the right path.  But any use of stats, graphs and charts is always subjective to a large degree, not to mention the time frame we’re working with (short, medium or long-run) must always be considered.  The analysis depends as much on the experience of the viewer as it does stat itself.  Also which stats you are including in your attempt at divination will slant it one way or another depending on what’s in the mix.

For instance, I can usually look at the relevant stats of any business and tell you which division needs attention, to what degree, and the eventual consequences of ignoring this.  I have been paid thousands per day to do just this.  For example, one time I walked into a business to do such an analysis, spent 1/2 hour looking over a wall full of charts and graphs, and saw what was wrong immediately.  In this case, the stats were correct but incomplete.  They were embarrassed to discover that they had left out two vitally important stat graphs that skewed their whole analysis and would have resulting in a wrong tactical action plan if they had acted only on the available information.

They never noticed this as it was something that was “not there” and consequently were invisible to them.  I’ve also seen that assuming facts not in evidence is an all-to-common human failing in analysis of anything.

Sadly, as with any analysis (especially in economics) there are often as many opinions for something as there are against it.   Harry Truman famously asked to be sent a one-armed economist, having tired of exponents of the dismal science proclaiming “On the one hand, this” and “On the other hand, that”.

The problem is that the analyst is trying to predict the future of what basically a criminally rigged system in our current economic culture.  And who can predict with any confidence what a criminal will do?  The only reliable answer is that the criminal will act to further their own self-interest exclusively.  And statistics and stat analysis is the most common tool used to obfuscate, intimidate, and manipulate others to their point of view.

But don’t get me started . . .

daniel w. jacobs

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