Statistics are Indispensable, But….

by Don Boudreaux on November 25, 2006

in Myths and Fallacies

Here’s my latest column in the Pittsburgh Tribune-Review.  In it, I warn against some common mistakes people make when they encounter statistical data.

And here’s a clip from from the column:

The same problem with averages arises when discussing average wage
rates. The average wage rate can fall even though everyone’s wages
rise. Here’s how. Suppose that America’s average wage rate is now $18
per hour. Now suppose that many low-skilled immigrants arrive and find
employment here at wages higher than they could earn in their home
countries. Possessing lower-than-average skills means that the wages
these immigrant workers earn will likely be lower than the U.S. average
— say $10 per hour.

America’s average wage rate will be pulled down even though no
individual’s wages fall. Indeed, it is possible for every American’s
wages to rise and the average still fall.

Let’s be clear: A change in an average might be
evidence of changes in the fortunes of the individuals who compose the
group for which the average is calculated. But it need not be so.

Statistics seem like straightforward, unambiguous facts;
they’re not. Care is required not only in their gathering but also in
your interpretation of them.


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