Friday, August 31, 2007

The Fallacy of Statistics

Nowadays, every group and organization with an agenda of some sort has taken to throwing out statistics, all in an effort to convince naive people into embracing that agenda. But if the truth be told, statistics are absolutely worthless when it comes to proving anything at all. Statistics are only as good as the method used to come by them, and they way they are presented.

EXAMPLE: I once sent two teens out to take a survey to determine how many Americans drink too much. I positioned the first in front of a Baptist Church on Sunday, to poll the parishioners. According to his statistics, only 1% drank too much.

The second teen was stationed just outside a popular bar in the "combat zone" near a homeless shelter. His statistics proved that 100% of Americans drank too much.

Of course, neither set of statistics is accurate.

And then there are those "drug" ads on TV, like the one that says a certain drug will reduce the chances of a certain rare disease by half. That sounds incredible. But when you discover that only one person is 100,000 will contract that disease, cutting the rate in half really does not mean much, does it?

Or the ads that say their product is "twice as effective" as a competitor. Hm-m-m. What if the competitor's product is not at all effective? Two times nothing is still nothing!

And then there are government statistics that politicians and political groups twist to suit their needs. Like the recent statistic that there are 700,000 more children uninsured this year than last year. Oh-h-h! Sounds so terrible. To the untrained ear, that would sound like the poverty rate is rising! But is it?

Actually, the poverty rate has shrunk considerably. So why so many "new" kids uninsured?

There could be many reasons. For example, the population has grown by over a million, so it is only natural that the number of unisured people would also rise proportionately. And some families are Christian Scientists who do not believe in medical care, so they have no need for insurance. But more likely, it has more to do with increased wealth and the ever-increasing cost of insurance.

Take my family, for example. None of us is insured. We do not need insurance - our income is more than sufficient to handle even the most catastrophic health event. And with the cost of insurance so high, it makes more sense to self-insure (which means we do not buy into health insurance). So, we are considered uninsured. But we are not. We are SELF-insured, paying our own way.

Entrepreneurism is still on the rise in America. More and more families are self-employed. And self-insured. But just because they are not insured does not mean they are poor, or that the poverty rate is increasing, as many would have you believe.

So the next time someone throws statistics at you, keep an open mind. You do not want to become a victim of misinformation by statistics.

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