Statistics for Dummies

With all the talking we have been doing in class about statistics, it is nice to know that there are other ways to lie about the GDP. As Dr. Greg Mankiw points out in his article posted on his blog, there is one very interesting publication that we see each year in which actual statistics make very little difference. The article is talking to Parade magazine and their annual report on working individuals and their salaries. Mankiw makes an interesting point in how the distribution of income is not well represented between jobs. Another reason that this article doesn't make statistical sense is the fact that areas around the country are compared without adjusting for things like the cost of living. Obviously an actor in Hollywood in Los Angeles is going to make more money than a plumber in South Dakota. At the same token, a plumber in Los Angeles would make much more money than that same plumber in South Dakota. This article is a poor representation of America. You can find the actual article.


Willy said...
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Willy said...

Mankiw stated that people in California are more likely to make more money regardless of occupation. The biggest reason is that when there is more money in an area, or state for that matter things cost more. This is sort of a geographical inflation per say and in California their were nearly 640,000 millionares in California in 2006. That is nearly double that of the next closest state. And now the state is going broke, Interesting to say the least. A list of millionares by state in 2006http://www.netstate.com/states/tables/state_millionaires_household.htm

Dr. Tufte said...

I've looked at these Parade pieces every spring for years.

I think they're financial pornography: they offer a representation of reality with which we have some familiarity, but in a way whose lack of representativenees pushes our buttons.

People with some self-discipline recognize this and turn the page. The rest need a twelve-step sponsor to support them when confronted with this sort of nonsense.