Statistics are (Mostly) Useless

Follow the money.

Statistics, numbers and graphs are used to tell a story. If you get to choose the size of your audience; 200,000 or 200,000,000 which would you choose? That is 1,000x difference between these two and for the table above, between Clark County today and the New York Times, it’s 6,158x for monthly web visitors.

It seems to me almost all of the conversation, in most areas focuses on larger areas. It’s just as easy to get statistics from smaller locals but people don’t because it doesn’t make as much money. They can sell it everywhere (including internationally) whereas a story that is focused on Portland, OR isn’t going to sell in New York City or even Seattle, WA, (despite their proximity).

So while it’s not a physics reason (like with radio and broadcast tv in the 1970s), it is almost as universally true based on the models of revenue.

National statistics are as useful to an individual as making decisions based off world statistics. The group is just too large to be meaningful unless you’re making decisions at that level (for example, thinking about a national health program, or a national law).

When you hear about national unemployment rates that’s almost meaningless compared to the unemployment rate of the closest big city. Same for house prices, inflation, and income. I don’t know when it started, but averages just aren’t useful. American’s households on average own 4.4 Bibles, if you walk your neighborhood, you won’t find one house that owns 4.4 Bibles. I don’t even know that you would find very many who own 4 or 5.

Statistics and averages can serve many different narratives about all the things that are going wrong, depending on what story you want to write.

What’s the alternative?

• Ignore national statistics except for ones that are only produced nationally (ie: Fed Rate, total money in the economy)
• Find local supplier indicators (RMLS sold, scrap metal prices, random length, a supplier who produces it monthly, you know your business better than I do)
• Find your local unemployment numbers, by industry
• Go beyond the average and how these affect your business

After you’ve been doing this for a year, test business decisions against data you’re seeing, write down why you’re making the decisions and what effect you thought would occur.