Statistics Can Mislead and Enlighten

Don Boudreaux on the use and misuse of statistics:

...what would happen to average worker productivity if Uncle Sam were to impose a minimum wage of $500 per hour. The correct answer is: "The productivity of the average worker would skyrocket!" This achievement, however, would be no cause for celebThe ration, for this higher productivity would result chiefly from the firing of all workers incapable of producing at least $500 worth of output per hour. Measured productivity in America would jump impressively even as the US economy tanked and most workers were cast into lasting unemployment.

The larger lesson is that proper interpretations of statistics often are surprisingly counterintuitive.

...suppose that you calculate the average height of people in the room where you now sit and find that it is 5 ft., 6 in. Now suppose a 2-year-old child enters the room. The average height of people in that room suddenly falls. Few of us would make the mistake of concluding that those people were shrinking in size.

The same logic applies to the calculation of average wage rates. Changes in this figure can be caused by changes in the composition of the labor force rather than by changes in the wages of individual workers.

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