The Problem with Data

President's Advisory Panel for Federal Tax Reform

Image via Wikipedia

Many states look at the Census report trying to figure out why their sales are lagging the national averages. The problem is the Census Bureau national averages are a blatant distortion of reality. The key to the states’ conundrum is Census Bureau sampling methodology does not take into consideration stores that have gone out of business. Sales tax collections obviously do. Closed stores make no sales and collect no taxes.

via Mish’s Global Economic Trend Analysis: Retail Sales Rise .4% from July – How Far to Pre-recession Levels? Where to from Here?.

I read all kinds of outlandish claims by people of all political stripes – usually supported by data. But data is tricky – to understand what it means, you have to understand what it is. You have to understand the rules. It can be done, but it takes a lot of work. Few of us are in a position to undertake that chore.

Here’s a hint: when you see some claim made based on some collection of data, search the Web. Often there is someone who has analyzed the data and can offer some insight into it’s nature. Barring that, simply maintain a very healthy dose of skepticism. It’s important to be reality driven.

Unless you just want to be an ideologue, in which case you can make up your own data.

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