Skip to comments.Real World Economics: Averages are misleading, from taxes to actuarials
Posted on 09/03/2012 2:34:23 PM PDT by TurboZamboni
Everybody knows what the word "average" means and that it is the most widely used simple statistic. But it can be highly misleading.
That occurred to me in two recent news reports.
One article a week ago detailed how households would be affected if we returned to the tax rates in effect from 1994 to 2001, including an elaborate tabulation of the average annual increase for taxpayers by state.
The second article dealt with average life expectancies relating to the solvency of Social Security and Medicare.
In the first article, the tax increases detailed ranged from an average of about $1,600 per taxpayer for low-income states to more than $4,000 for a couple of high-income ones.
An online commentary by Yahoo analyst David Chalian emphasized that if the Bush tax cuts are allowed to expire for all, the average tax collected nationwide would go up by more than $2,000 per taxpayer.
Both are correct. But both ignore the fact that using an average in this case can be highly misleading because increases for individual taxpayers are widely dispersed, and the distribution is highly skewed, as are income taxes paid in any year.
(Excerpt) Read more at twincities.com ...
And there is their error. Their "source" is the same Democrat propaganda bot who got fired last week for saying "Republicans have no problem partying while black people drown".
The average number of testicles per person in the US is close to 1.00.
I agree that life expectancies for people reaching age 65 have not changed that much since the 60s.
But I also think that the Death Panels can fix SocSec and Medicare financials pretty quickly.
My dog is a part time Yahoo analyst.
Recall two things dear readers. There are lies, damm lies, and statistics. And Figures don’t lie, but liars figure. In many instances one can skew the data to support your adgenda.
“In both cases, tax increases and life expectancies, one can get a better idea of the situation if one knows the median as well and the average or mean”
I always look for the median (the middle) in all statistics as it actually expresses what most people think of when they see “average” - half above and half below - but that’s not the average, that’s the median.
The author says the meidan is usually not done because it requires information that the average does not. But, when the organizations that produce so many publicly noteworthy “averages” are the same institutions that have the data, and have enough of it to do a median, it’s simply an institutional excuse that it is more difficult. It’s usually intitutional and journalistic laziness.
They are fine with the sheeple thinking an average is the mid-point that it is not.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.