“How to Lie With Statistics”

Precise falsehoods exist for many reasons. Beware of the tricks.

A classic 1950s book reminds us that the numerical precision of statistics can mask anything from an irrelevant average to a flat out falsehood. Here are some of the tricks to watch out for during the impending election year.

It may well have been that famous remark by the British statesman Benjamin Disraeli,
“There are three kinds of lies -- lies, damned lies, and statistics,” that prompted Darrell Huff to write How to Lie with Statistics. His short, humorous book, originally published in 1954, became an instant classic. The book highlighted the fact that statistics can be manipulated in various ways to serve the purposes of the purveyor. As Huff put it, “Averages and relationships and trends and graphs are not always what they seem. There may be more in them than meets the eye, and there may be a good deal less.” In other words, statistics can be used either to inform or to mislead. Huff assured us that his book was not intended to be “a manual for swindlers,” but rather to help us arm ourselves against statistical con men by learning some of their tricks. More than ever, alas, this seems like a very good idea. The political rhetoric these days reeks of mendacity.

Here is one current example. Several weeks ago, Texas Governor Rick Perry made headlines when he pointed out that the affluent pay most of the Federal income taxes in this country while 47 percent of the earners pay none at all. He called this an “injustice”. What’s wrong with this statistic? First, it begs what should be the first question about any statistic: “Why would this be the case?” The answer is that our tax burden simply reflects the highly skewed income distribution in this country. In fact, the (famous) top 1 percent of income earners took home 24 percent of the total national income in 2010, while the top 10 percent took home 49 percent. In contrast, 47.3 percent of our workers earned less than $25,000 -- close to, or less than, the official poverty line of $22,343 for a family of four.

The other problem with Governor Perry’s fine sense of justice is that he was engaging in a statistical charade. It was a prime example of statistical cherry picking. If you look only at Federal income taxes paid you get a very different result than if you consider the total tax burden of our income earners. Counting payroll taxes, sales taxes, excise taxes for gasoline, and the like, you get a very different result. According to the Tax Policy Center at the Brookings Institution, in 2010 the top 1 percent paid a total of 30.8 percent of their income in various taxes, while the poorest 20 percent actually paid 16.3 percent, a lot more than “none at all.”

Let’s take a brief look at some of the other kinds of statistical gamesmanship. One of the most common and well-known tricks could be called the magic of averages. Anyone with a basic knowledge of statistics knows that averages come in three different forms – mean, median, and mode. Thus, in the year 2000 the mean family income in the U.S. (total income divided by the number of families) was a respectable $45,000. But if we look at the median income (the mid-point between the highest and lowest), it was a less impressive $33,000. And if we look at the mode, where the largest number of family incomes was concentrated, it was an anemic $22,000. Moreover, all of these averages mask the extreme distribution of wealth and poverty in the U.S. In 2006, the bottom quintile (20 percent of the households) earned less than $19,178. The top quintile earned more than $91,705. So anyone who uses the “average” family income in any form as a measure of our standard of living is gilding the nettle in order to make it look like a lily.

Another common form of statistical subterfuge could be called creative graphing. Say you want to impress an audience with the rise in crime rates. In actuality, the overall rate may only have increased ten percent over the past 20 years. But if you compress the scale on the horizontal axis, so that the line represents all 20 years, while stretching the scale on the vertical axis, so that the line represents ten one-percent increments, the result will be a line with a steep upward slope even though the average increase is still only one-half a percent per year.

Another kind of statistical legerdemain involves what I call crunching diversity. For decades, our public opinion polls have been asking a general question about the state of the nation, such as “Do you think the country is going in the right direction or the wrong direction, overall?” Or “Are you satisfied/dissatisfied with the way things are going in this country?” Currently, more than a dozen different polls show that the number of people who are satisfied versus dissatisfied is near the historic lows of 2008-2009. Here are some of the results: Rasmussen -- 17-75%; CNN -- 25-74%; Gallup -- 12-86%; NBC/Wall Street Journal – 19-73%; CBS/New York Times – 21-74%; Time – 14-81%; Pew 17-79%.

The country is obviously in a foul mood, but what does it mean? Partisans on both sides are prone to interpret the results in terms of their own political agendas, but a recent in-depth survey that asked people to name their gripes found there is a great diversity of gripes. Somewhat surprisingly, less than one-quarter named unemployment and the economy as their main concern. Other complaints included the wars in Iraq and Afghanistan, taxes, government regulations, the deficit, climate warming, illegal immigration, the wealth gap, and so on. In other words, there is a long, bipartisan shopping list of dissatisfactions.

This is just a small sample of the many different kinds of statistical sleight of hand -- small samples that are used to draw universal conclusions; estimates posing as facts, labels that shift their meaning over time (a recent example was a large company that claimed to have a doubled its wages in a year when in fact it shifted its workers from part time to full time at the same wages); irrelevant averages (you don’t built houses for families with 3.14 people); spin doctored statistics; and, perhaps most nefarious, made up statistics (i.e., lies posing as hard facts). The social critic Ann Coulter, who is often loose with the facts, was caught in this famous example. In one of her books she claimed that President Ronald Reagan, despite various scandals during 1987, only saw a five-point drop in his approval rating, from 80% to 75%. Actually, it was a 16 point decline, from 63% to 47%, a more than trivial difference.

Finally, there is a class of bogus statistics that are simply a product of carelessness. One example, what could be called mindless extrapolation, was cited by sociologist Joel Best in his book, Damned Lies and Statistics. Best was startled to find this statistic in a reputable journal in 1995: “Every year since 1950, the number of children gunned down has doubled.” How could this be? Best did a simple calculation. Even if there were only one child “gunned down” in 1950, by 1995 the number of doublings would have amounted to 35 trillion, truly an alarming statistic.

How can we defend ourselves against the statistical numbers game? Here are a few rules of thumb. Don’t be too trusting. Always look at any gee-whiz statistic with skepticism. Ask who is the purveyor, and what are his or her (or its) motives? How were the numbers produced, and what do they really mean, or hide? If in doubt, use a search engine like Google to check out the sources, and methodologies, and (possibly) find other contrary evidence. It takes work, but there are no short-cuts in this mendacious age. The old saying “let the buyer beware” (caveat emptor) also applies to the daily onslaught of propaganda that may only be masquerading as “information.” It’s important to be able to tell the difference.

It’s the GNP, Stupid!

No, that’s not the Gross National Product. It stands for the Grover Norquist Party, what the Grand Old Party has become. Almost every member of Congress and all of the Republican Presidential candidates except John Huntsman have taken lobbyist Grover Norquist’s pledge:

“I will: ONE, oppose any and all efforts to increase the marginal income tax rate for individuals and business; and TWO, oppose any net reduction or elimination of deductions and credits, unless matched dollar for dollar by further reducing tax rates.”

Lest you think this is merely political posturing, or campaign rhetoric, in fact no Republican in Congress has voted for an income tax increase since 1990. It was this rigid partisan stance that ultimately doomed the Supercommittee’s effort to reach a compromise. As one of the Democratic members, Senator John Kerry, commented: “unfortunately, this thing about the Bush tax cuts and the pledge to Grover Norquist keeps coming up. Grover Norquist has been the 13th member of this committee without being there. I can’t tell you how many times we hear about ‘the pledge, the pledge.’ Well all of us took a pledge to uphold the Constitution and to full and faithfully and well-execute our duties and I think that requires us to try and reach an agreement.”

The Center for American Progress concluded: What It Means: An Oath Of, By, and For the One Percent.

Mind the Gap!

There are radical differences in our political rhetoric, but only one reality.

"Mind the Gap," the famous warning sign in the London Underground (where some station platforms are misaligned with the doorways of the subway trains) provides a metaphor and a battle-cry for our present condition. As the New York Times op-ed columnist Paul Krugman put it, "Republicans and Democrats don't just have different priorities; they live in different intellectual and moral universes." Worse yet, they have radically different views of reality, and about what is needed to re-start our stalled economy.

For Democrats, there is a moral imperative to provide for the basic needs of our fellow citizens at a time when 14 million people are officially unemployed and another 10 million are without work but are uncounted, or else seriously underemployed. To Democrats, this calls for such measures as job-creating initiatives, extending unemployment insurance, expanding the food stamps program, and protecting Social Security, Medicare and Medicaid.

For Republicans, taking House Speaker Boehner at his word, raising taxes on the "job creators" is both unfair and would undercut our economic recovery. The economy is stalled because the business community is "basically on strike" over high taxes, burdensome government regulations, and our ever-increasing Federal budget deficit. The solution is to lower taxes on the wealthy, drastically reduce the oppressive regulatory burden, and slash domestic (not military) spending. Following the conservative activist Grover Norquist, many Republicans view taxes, especially on the wealthy, as a form of "stealing".

As Krugman says, "the facts have a liberal bias." Economists are increasingly persuaded that the root of our current economic malaise is a lack of consumer demand - spending on goods and services. The combination of high unemployment, a depressed housing industry, home values that, for many owners, are "underwater" (worth less than their mortgage), plus heavy consumer indebtedness, tighter credit, and other factors have taken the steam out of our economic engine. Our major corporations are sitting on near-record cash hordes but are not spending it on job-creation because sales remain weak. It's economics 101.

As for those abused and striking business owners, this has been termed "a myth" by a long-time entrepreneur and venture capitalist, Garrett Gruener, who heads a new group called "Patriotic Millionaires for Fiscal Strength." They champion raising taxes on millionaires - yes, raising taxes. In a PBS Newshour interview, Gruener stressed that marginal tax rates (currently 35 percent on incomes over $1 million versus 39.6 percent in the years before the Bush era tax cuts) "literally has had zero impact on the investment decisions I have made." Gruener also calls the argument by Grover Norquist that taxes on the rich amount to theft "pathetic." Granted that taxpayer money is not always spent wisely; there is a lot of room for improvement. But "we make decisions as Americans ...to build another aircraft carrier or to build a freeway, and then we fund it...The decisions we make as a country are decisions we have to pay for...collectively."

Beyond the gap in our political rhetoric, the other gap that we need to be mindful of is a set of deplorable measures of national well being that rank us at the bottom of the list of developed nations. Thanks to the "99 Percent" movement, more of us are now aware that last year the top 1 percent of earners took home 24 percent of our total national income and the top 10 percent took home 49 percent. The other 90 percent of us got the remaining half. As for the distribution of wealth, the top 1 percent own 40 percent of the total and the top 20 percent own 87.3 percent. That leaves 12.7 percent for the other 80 percent of us. All told, some 50 percent of our workers earn less than $25,000 a year - most of them below the new poverty line figure of $24,343 for a family of four. Not only are these numbers shameful but they represent a political time-bomb.

Among the many consequences of this extreme disparity of income and wealth, some 49 million Americans (one out of six) are now living in poverty, and close to 50 million Americans lack health insurance. An equal number, including 17 million children, were reported to have gone hungry at various times last year. Another 50 million have recently been reclassified as "near poor," meaning that one-third of our population, all told, are struggling economically.

This has affected other measures of our national wellbeing. We rank 45thin the world in infant mortality and 50th in life expectancy, behind every other developed nation. We have by far the highest crime and incarceration rates in the industrialized world. In comparative tests among nations of basic reading and math skills in 2011, our students ranked 17thin reading and 32nd in math proficiency. We even rank well down the list of nations in such measures as government corruption and trust in government.

The litany of depressing statistics could go on and on. The reality is that we are dreaming -- about a past that is long gone, and about some proposed fixes that would make matters much worse. The gap between some of our fantasies and the ugly reality is about as wide as the Grand Canyon. As the train carrying our hopes for the future is getting ready to leave the station for the 2012 election, we need to "Mind the Gap."

A Broken Nation?

Can a dysfunctional society have a moral meltdown?

We have always had a unique relationship with Great Britain. At one time it was the mother country. Then it came to be viewed as an oppressive parent and was violently rejected. In the nineteenth century, Britain was the hub of a world-wide empire and became a model for our own young country. In the twentieth century we shared a terrible economic depression and fought side-by-side in the two greatest wars in all history (so far, at least). After World War Two we enjoyed a "special relationship" based on a common language, similar values (especially free market capitalism) and close military collaboration during the long Cold War and the wars in Iraq and Afghanistan.

The Great Recession has dealt a serious blow to all of the Western democracies, but the senior British journalist Ed Vulliamy argues (in the current Harper's) that the toll has been much greater in Britain. He sees a deeply dysfunctional society, culminating 30 years of national decline, now being pushed over the precipice. His indictment makes for depressing and hauntingly suggestive reading.

The destruction of Britain's once preeminent industrial sector is now complete, due in considerable measure to incompetence, opportunism, and self-defeating actions, and the British working class has been impoverished. Even such British icons as Rolls-Royce, Jaguar, Cadbury's, and Harrod's (the famous department store) are now foreign-owned. Britain's once efficient public services, including the railroads (which the British invented), are mired in high costs, high fares and poor performance. Even its housing sector, recently a dynamic engine of economic growth, has suffered a steeper decline than in our own country.

British government and politics, once the gold-standard for the democracies, has also been corrupted in various ways, while the financiers in "The City of London" (analogous to our own Wall Street) now dominate the economy, the politics, and even the sex life of the nation. And like America, the British government bailed out its banks during the financial meltdown only to see them return to speculative excesses and astronomical bonuses ($22 billion this year.

Most disturbing, to Vulliamy, are the tectonic changes in British social lifeand values. A society once admired for its civility, its sense of fairness and deep pride in its heritage, has lost all of this, including even its sense of a common purpose as a nation. Ethnic, economic, and social class divisions run very deep in Britain. Looking ahead, Vulliamy sees no great untapped potential for revitalization, only further decline.

Are we destined to suffer a similar fate? The parallels are eery, and the immediate prospects don't look good. Indeed, we face a political Armageddon of sorts in just a few days, when Democrats and Republicans must either fashion a compromise over our serious national deficit problem or else deepen the economic and political divisions and cause further damage to our economy -- and the common good. An escalating civil war, with the Tea Party and Occupy Wall Street movements on opposite sides, seems all too likely.

Yet we need to remember one of the important lessons of history. Renewal and revitalization are also possible. National decline is not inevitable and irreversible. Our great nation still has the capacity for renewal. But we need a new vision (one "candidate" is spelled out in my book, The Fair Society), along with strong leadership and an energized electorate. Revitalization on every front should be our national agenda for 2012.

Blaming the Victims

It’s your own fault if you’re poor. You didn’t go to college.

It's like saying, if you're not an NBA basketball superstar, you just didn't try hard enough. The newest conservative rationale for shrugging off poverty is that everyone has the opportunity to be a Horatio Alger if they go to college. College graduates earn much more than high school graduates on average and have much lower unemployment rates in hard times. In a recent op-ed column in the New York Times, David Brooks wrote that the (relative) benefits of higher education "have steadily risen" over time. In 1979, college graduates averaged 38 percent more income than high school graduates. Now it 75 percent more. So, you should go to college.
What Brooks fails to mention is that the median annual compensation for (male) high school graduates has actually fallen by 28.4 percent over the past 30 years (from $44,200 to $32,000 in 2008), and by more than half after including inflation. Many millions of well-paying middle-class jobs for high school graduates have been outsourced, or were eliminated by automation, or have simply disappeared as businesses have lost out to foreign competition. Or else the pay scales have been ratcheted downward. General Motors pays its older workers $28 per hour. New hires get $14 per hour. And Walmart, the nation's largest employer, pays a little over $10 per hour.

There are now close to 50 million people living in poverty in our country. Of these, some 25 million are unemployed or underemployed workers, many of them long-term (more than a year) who are desperately seeking good jobs. It is estimated that currently there is one job available for every five people who are looking for work. Of those who do have jobs, 47 percent are "working poor" earning less than $25,000 a year - close to the poverty line for a family of four. (A recent study by a women's organization showed that even a single worker must earn at least $30,000 to have enough to save for emergencies and retirement, not to mention a college education for their children.)
Of course, unemployment and low wages are not the only obstacles to getting a college education in poor families. The costs for attending college have continued to escalate (up more than 130 percent in the past 20 years), and even a four-year public college today costs $20,339 a year on average, according to the College Board. Even middle-class students are graduating with an average of more than $23,000 in student loans. For most of the poor in our country, college is financially way out of reach. In fact, the rate of "upward" social mobility in this country is among the worst of the major OECD nations. The "land of opportunity" has become a myth for most people at the bottom of the economic pyramid.
Finally, the Horatio Alger, up by the "bootstraps" model ignores a fundamental reality --our biological and social diversity. Even Plato inThe Republic more than 2000 years ago recognized that every society is made up of people with different abilities and interests that suit them for different roles, and this has been overwhelmingly confirmed in the past 100 years of empirical research in behavior genetics (where I had a post-doctoral research fellowship many years ago).
Like all other traits in humankind (and in every other species), variation is the rule both in our personalities and in our talents and intellectual abilities. Overall, about 50 percent of the variance in our major personality traits and mental abilities can be attributed to "heritable" gene-based variations. Likewise, many studies over the years have shown that environmental differences -- everything from childhood nutrition and access to health care to family influences, peer relationships and the quality of the schools -- can make a major difference in our performance as mature adults.
So, a society that provides generous rewards for college graduates and eliminates or downgrades "blue collar" jobs, while making a college education a prerequisite for a decent job with decent pay, is fundamentally unfair. A cartoon currently making the rounds on the Internet says it all. It shows a teacher sitting at a desk telling a bird, a monkey, an elephant, a fish, a seal, a penguin and a dog that, to be fair, they are all going to take the same exam. The teacher orders them to go climb a tree.

It's not necessarily your own fault if you can't climb that tree - or get a college degree. We need to re-create an economy where even high school graduates can once again thrive.

Guns and Butter!

It was the Nazi’s in the 1930s, it seems, who first used the term “guns and butter” as metaphor for the choices a nation makes about how to use its scarce resources for defense versus domestic needs. The Nazis chose guns. “Butter only makes us fat,” the corpulent Luftwaffe chief Hermann Goering told the German people.

The phrase reappeared in this country in the 1960s, in connection with the Vietnam War. President Lyndon Johnson advanced the argument that, in paying for the war, we could afford both guns and butter. It turned out not to be true. Actually, the war was funded with deficit spending – a precedent President Bush followed forty years later with even more disastrous results for the nation’s fiscal condition.

Now it seems we are facing another guns and butter choice. Conservative politicians want to slash domestic spending but leave defense spending untouched, or even increase it. We already spend far more on defense (and homeland security) than all the rest of the major nations of the world combined. Meanwhile, a new study of social justice (including the income gap between the rich and the poor) in the 30 OECD countries ranked us close to the bottom, just ahead of Greece, Chile, Mexico and Turkey. Some 50million people in this country are living in poverty, and the current deficit reduction proposals will make this situation even worse. It seems we cannot after all afford both guns and butter.