Lies, Damned Lies… And Infographics

The classic line about “Lies, Damned Lies… and Statistics” has always been used to describe the persuasive power of numbers, particularly the use of statistics to bolster weak arguments. Well, in this day and age of time-starved attentions, infographics have become the new way to bolster arguments.

Well, here’s a nice primer by way of Investopedia that shows you “How To Lie With Financial Statistics“. What you do with the knowledge… is up to you. 😉

How to lie with:

  • The Illusion of Precision – using decimals to create a sense of authenticity (e.g. 2% vs. 2.35%)
  • Percentages – to mask the actual numbers (50% growth sounds impressive until you realize you started from $100, compared to, say, $10,000)
  • Focusing on rates of change instead the actual information
  • Spinning a chart is to choose the starting or end point so as to emphasize only part of the process (E.g. To stress an upward trend, start the graph in a deep trough. To make the graph look generally positive, just leave the downturn out altogether)
  • Tricks with axes and scales (E.g. Presenting the sales figures of a stagnating company with the turnover running from nothing to $100, it is obvious that there is no growth or dynamic. On the other hand, if you chop off most of the y-axis, you can exaggerate tiny fluctuations so that things look like they are on the up-and-up.)
  • Pictograms constructed to mislead. Even if one magnitude is only 10% larger than another, it can be shown in a picture as double the size. Thus, bulls that only marginally outweigh the bears at a certain point in time can look very dominant. Or, wads of dollar notes can be made bigger or smaller relative to the rest of the graphic to create the desired (misleading) impression.
  • sampling techniques that can push the numbers up or down, as you please. If an investment firm conducts a customer survey, who is to know if they choose only those portfolios that have done well and cite their owners’ enthusiastic comments, and simply ignore those who are seething with rage at having been sold some dud?
  • It is an endless procession. Medical companies can paint a bright picture by looking at relative changes rather than absolute ones. Construction companies can report on what has been built rather than what is occupied. Arms manufacturers can play around with their numbers and pictures so that the true market share going to alarming undemocratic nations looks reassuringly low.

Full article here.





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