What Statistics Tells Us

Don Boudreaux with some great commentary on interpreting statistics:

The same problem with averages arises when discussing average wage rates. The average wage rate can fall even though everyone's wages rise. Here's how. Suppose that America's average wage rate is now $18 per hour. Now suppose that many low-skilled immigrants arrive and find employment here at wages higher than they could earn in their home countries. Possessing lower-than-average skills means that the wages these immigrant workers earn will likely be lower than the U.S. average -- say $10 per hour.

America's average wage rate will be pulled down even though no individual's wages fall. Indeed, it is possible for every American's wages to rise and the average still fall.

Let's be clear: A change in an average might be evidence of changes in the fortunes of the individuals who compose the group for which the average is calculated. But it need not be so.

Statistics seem like straightforward, unambiguous facts; they're not. Care is required not only in their gathering but also in your interpretation of them.

(Hattip Cafe Hayek)