Author Archives: Money Reasons

About Money Reasons

A offbeat personal finance blogger that comes from the tech world.

Sometimes Statistics Lie

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Lately, I’ve been noticing that people are using statistics more often to lie instead of using common sense.

For instance, I work with a friend who was very upset because it wasn’t recognized that she increased survey participation by 50% versus the prior month’s participation numbers.  Since I’m a little more mathematically astute, she came to me to check if her calculations were correct (and to complain).  So I quickly ran the numbers in my head and she was correct, she did increase the survey participation by 50%.

Now most of us would agree that a 50% increase is fairly impressive, at least from a mathematical perspective!

Statistics Don’t Tell The Entire Story

The catch with my friend is that the number of participants involved with the survey the prior month was only two.  The month that she became involved with the survey results, the number increased to three participants.  So while technically she can claim that her involvement increased the participation rate by 50% versus the previous month… it’s still just one additional person!

To really make matters worse was the fact that her manager was upset because 2 month prior the survey participation number was four!  So in her manager’s viewpoint, the numbers actually decreased by 25%.  While I wholeheartedly agree with my friend, when you speak in terms one or two people, the statistics really doesn’t matter much.  It could be just luck that one more person filled out a survey in her month than versus the previous month, or two months ago.

Obviously, she was right in her calculations, but the significance of one person doesn’t really matter.  Especially when the goal is for having hundreds of responses per month instead of just single digits numbers.

I personally find that a floating average number, or some other kind of baseline is the best for comparing performance.

For example, with my friend, if the average participation rate for the surveys is one person per month, then realistically 3 actually is a phenomenal number and she should be acknowledge for her efforts.

I’m writing this because all to often I see people on all sides of arguments using mathematically correct statistics in a way that promote their argument without taking into account the historic average of numbers the statistics represent.  This is a common tactic with politicians in general.

Statistics that Use Bad Sampling Sets

Poor Statistical Sample Set

Sometimes Statistics Lie

Okay, I’m going to get nerdy on everybody here, so just bare with me… If the sampling set taken isn’t representative of the general population or the target population being represented, then the statistics that are used on the non-representative sample will be inaccurate.  For example, if you take a count of the eye color of 20 Swedish people as your sample set, you’ll derive a number that states that % of the eye color of everybody is blue.  Obviously, we know this isn’t true, but such sampling occasionally happens, especially in politics.  The above picture declares Dewey is the new president, but we know he wasn’t elected.  This was due to an error in the sample set or size of the sample set.

What to Use When Statistics Lie or Are Abused

Try to find unbiased results.  This isn’t easy though, since usually the statistics that a person or group presents was collected by them for the presentation.  This alone should set off red flags!  How accurate can the statistics be if they are using the statistics for their presentation?  Wouldn’t be be kind of silly of them to present statistics that would undermine there cause?

Personally, I try to come to a conclusion based on common sense with such matters.  This isn’t easy and is highly subjective, but without conducting a fair and representative sample, it’s just not possible to get what the real statistics are around a topic.

Statistics that Don’t Account For All Variables and Time

There is a concept called Spurious Relationships, which basically exists when two variables seem related but actually aren’t.  For instance, one of my favorite examples is that ice cream consumption increases in summer and so does the temperature in that given area.  So does eating ice cream raise the temperature of the climate in summer?  No, but yet the two variables seem to be highly correlated…

So basically, what I’m trying to say is just because a correlation may seem to be a statistical number that make sense, often time it doesn’t.  Using common sense, you can debunk such poor statistical usage and you should question the presenters and their motives.  Don’t be fooled by numbers, just because someone uses statistics doesn’t mean that they are right.

Don’t believe the hype, think things through!

MR

Blogging on a Cool Fall Day

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I’m in our guest room, writing this blog on a child’s desk.

It’s around noon, and looking out our windows, I can see the wind is blowing causing our neighbor’s trees leaves to fall, reminding me that soon it will be snow falling instead of leaves.  This year went by in a flash, the summer seemingly passing with just a blink of our eyes.  We had so much fun, that everything went too quickly!

This past summer, we vacationed on a small Florida Island called Captiva Island, experienced swimming with dolphins, went to a water park at Kalahari Resorts, and just basically kept busy the entire season.

Just writing this blog has been a challenge let along improving it.  I had planned on changing the theme, doing some SEO optimization, and other non-writing blogging aspects to a small but growing blog such as mine.  Seeing the fall leaves has started a fire under my butt, so now I feel like it’s time to run again.

So, that said, here are some great blogging articles to scope out while I play catchup.

Well, there you have it!  Enjoy the reading from this great group of bloggers while I go try and improve my backend blogging skills.

Enjoy,

MR

Frugal Confessions: I Do Not Own a Cell Phone

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Before I begin this confession, let me give a shout out to Amanda at Frugal Confessions!  Her blog is about all kind of frugal activities and smart money management in general!  Since meeting her in person at FinCon11, I can honestly say she’s is a truly beautiful individual inside and out!

Apple iPhone

Smart devices make it possible

I Don’t Own a Cell Phone!

Actually I have never owned a cell phone!  Now people that know me see me with a cell phone in a holster at my side at all times.  To be completely honest, I would feel kind of naked without that silly phone bouncing on my side like I’m toting a gun…  Yet, while I carry a cell phone, I don’t own it!  It’s a company phone…  All of my cell phones have been company phones.

At one time to encourage employee’s to always have their phone on them, my employer would buy phone and tell everybody that it was okay to use them for personal use too (if it’s not done too much).  So for over the past decade, that is what I’ve done.  I’m sure I’ve saved thousands of dollars in the process.  But times have changed…

Why I Now Need a Cell Phone…

I was raised frugally, so the only time I buy something expensive is when I absolutely need it.

So, the question is… “Do I absolutely need it now?”

No, not yet, but I know eventually I will need one!  The evolution of this blog mandates that I become a more actively social person.  Much to my surprise, I enjoy the social aspect…  It’s grown on me lately (probably because of meeting so many great people at fincon11).  So now I get by with Google Voice and Skype, but eventually I’ll need a smart phone too.

What Cell Phone Would I Buy:

Any cell phone beats nothing, but probably a droid or a iPhone…  What even type of phone I buy, I need internet access so I can tweet and check my email at a drop of a dime!  I might even bypass a phone all together and buy an Apple iPad instead.  Then again, perhaps I’ll just take my son’s old iPod touch when it’s time to get him the newest model (being frugal, this is probably what I will do).

What do you think?  Is a smart phone (cell phone) necessary?  Or are you fine without?

Cell Phoneless me,

MR

Why We Should Not Hate Businesses

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One thing about the News stations are that they only tell you the bad news that they know you’ll watch, and this makes sense, the new station is a business trying to make money and not giving the public what they want is a sure way to go out of business.  But to me it seems that fear and guilt are the main news items.  This is sad.

If you think about it, it’s kind of a paradox, when a news station complains about large businesses when they themselves are a large business too!  The problem with news stations is that they need to stay in business, and hating companies and point out the few bad ones keeps viewership high.

So,  it’s up to business and financial bloggers to explain why we should NOT hate businesses!

Global Perspective:  Why We Should Not Hate Businesses:

Historically, businesses are what have made USA a superpower in the world.  It’s the USA capitalism model and the products that enabled America to be the envy of practically all of the other countries.  The lightbulbs, cars, mass production, medical and technological advances were all be created by the capitalism!  This is why both Russia and China have scrapped their old socialism models and have introduced capitalism or a derivation of it in their societies.  After years of problems, both of these powerhouse nations realize they were wrong and adjusted their ideology to reward those that put forth great efforts.  Both countries have learned that personal risk taking and working long hard hours should be rewarded, or else nobody tries and the entire country stagnates and starts to decay.

National Perspective:  Why We Should Not Hate Businesses:

As I watch the 99% protesters complaining about the top  1%, I notice that they all have bottled water, large coffee house lattes, and other things made by the businesses that they are indirectly protesting about.  It’s very ironic and makes them look a bit naïve in my opinion.  Perhaps I’m past the age where I let others influence my thinking (like liberal professors), and instead use my own personal experiences and common sense to influence my opinion on matters.  I guess that old saying “with age comes wisdom”, has some element of true after all.

Local Perspective:  Why We Should Not Hate Businesses:

From a local perspective, large businesses are the ones that pay people money so they can provide for their families and actually have a very decent lifestyle.  The middle class in most other countries aren’t like the middle classes in the USA.  In most other countries, the middle class have just a little money left over to buy luxuries like make up for women, and perhaps something like a cheap radio.  In the United States, the middle class has all of that and goes on trips that would make the middle classes in other countries think that our middle class is rich.

So if businesses  builds our houses, makes medicines for us to overcome illnesses that could kill us, makes our cars, creates cloths for us to wear, and provides food for us to eat cheaply, why do we hate them so?

I think we should be proud of our businesses and that fact that we have such a great lifestyle!  Even when comparing the middle classes in other Developed countries, we come out ahead…  In fact, our middle class (and working class) is the top of the heap…  Why do we want to change from being the best out there to something that isn’t?  Perhaps creating a negative spin on the country helps politician get elected (the slogan Yes We Can comes to mine)

In general, I don’t understand why Socialism and wealth redistribution seems to be the answer from the white house and extreme liberal democratsl… We know from history that such ideas are losers…

Perhaps we bloggers that exist in the business and finance niche should explain the way it really is, in a common sense style.  After all, we have no hidden agenda and the majority of us want everybody to succeed.  We all benefit when our country is successful with great businesses…

What do you think?  If you hate businesses (in general, not the exceptions), state your reasons below.

Cheers,

MR