Irish Liberty Forum

Archive for the ‘depression’ Category

More on Inequality and Misuse of Statistics

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Ever taken a statistics course? Most stats lecturers devote a special moment to highlight how statistics can be misused. For instance my tutor once showed us a graph like this:

Coincidence?

Coincidence?

We can clearly see that there’s a correlation between ice-cream consumption and deaths by drowning. But what can we infer from this? It’s possible that eating ice-cream causes drowning (due to stomach cramps while swimming). It’s also vaguely possible that drowning deaths cause increased ice-cream consumption (mourning relatives might go for an ice-cream to cheer themselves up). However the most sensible explanation is that both ice-cream consumption and drowning deaths increase is due to another factor: the weather. People eat more ice-cream and go swimming more often in summer.

However, such a straightforward explanation is hardly ever seen in economics. The empirical approach often remains unquestioned. Consider this syllogism: in the past, taxes were low. Today, taxes are high. We were poor in the past but now we are rich. Therefore, increasing taxes causes prosperity. Such a view is completely ridiculous, yet almost completely unquestioned.

Or take the suggestion in the graph below. Income inequality sharply increased before two major recessions. Therefore it’s fair to assume that one causes the other.

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Written by 20000miles

October 9, 2009 at 5:51 am

Housing Depression: The Truth Behind The Statistics

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Two of my favourite Youtubers, visionvictory and george4title, teamed up recently to produce an amazing mini-series, on the ground, about the housing depression in southern California. How long until scenes like this come to Ireland? Or maybe they’ve arrived already?

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Written by Graham

April 22, 2009 at 8:27 pm