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Friday, July 24, 2009

There are lies, damned lies, and statistics

Here's a shocker: there is no inflation in Australia because men's underwear is cheap. Thursday's Age reports that, "Sharp falls in the prices of men's underwear, fruit, vegetables, milk and bank charges helped offset big rises in the prices of women's underwear, hospital services, real estate and petrol."

The data, courtesy of the Australian Bureau of Statistics, suggest that if you wear jocks, eat apples and drink milk, your cost of living is going down, even if you get sick, buy property, drive a car, and sometimes wear women's underwear. That's probably good news for somebody out there. But is the cost of living in Australia really going down? Common sense tells you the cost of living is going up, despite the really great deals you can get on men's underwear.

"There is terror in numbers," writes Darrell Huff in How to Lie with Statistics. And nowhere does this terror translate to blind acceptance of authority more than in the slippery world of averages, correlations, graphs, and trends. Huff sought to break through "the daze that follows the collision of statistics with the human mind" with this slim volume, first published in 1954.

The book remains relevant as a wake-up call for people unaccustomed to examining the endless flow of numbers pouring from Wall Street, the government, and everywhere else someone has an axe to grind, a point to prove, or a product to sell. "The secret language of statistics, so appealing in a fact-minded culture, is employed to sensationalize, inflate, confuse, and oversimplify," warns Huff.