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Thought of the Day: Narrow Contextualization leads to Narrow Opinions, especially when Charts are Involved!

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I recently read a cross-post on my friend Ted Deppner’s Facebook (Ted is a long-time friend who I consider very intelligent, but we often disagree).  In his cross-post, he shares a chart from John Stossel (And, I should share that I have appreciated some of John Stossel’s reporting, such as his reporting on education in America, although that too was not necessarily completely “objective” reporting.) But, in the case of this chart, I think it clearly shows how one can “lie with statistics”, or maybe more accurately that statistics are often used to support the presentation of an idea, not to support the creation of an idea.

Now, before I get into the details about the chart, I want to share some disclaimers.  First, economists argue over what statistics should be used to measure unemployment, but I am going to stick with just the Civilian Employment-Population Ratio (EMRATIO) because that was what was in the original chart.   Also, the original message that accompanied the chart was “President Obama touts, ‘The lowest unemployment rate in over five years,” but it’s only because many gave up work. The percent of people employed is flat.”  But the implied message, in my opinion, was trying to show that President Obama is bad.  And I tend to agree with those who say that presidents tend to get too much of the blame (or credit) for the economy, as there are many other factors, with our system of government having Congress being those who are in control of much of what government can do to help or hurt the economy (and even Congress is actually quite limited!)

So, after seeing Ted’s post, I decided to do some quick analysis to look at the data from different perspectives.   One of the first things I did not like about Stossel’s graph was that it put very narrow boundaries on the Y axis, which always makes dips (or increases) look more dramatic.  Although, even the FED, whose data was the source for the chart, didn’t use the full 0% to 100% as their boundaries.  And, this does make some sense, given that the further you “zoom out” from a chart, the more detail you lose.  So there is always a trade-off of detail vs. a visual bias.  Also, maybe in the case of this number, small changes to the percentage are more important than with other numbers.  But, still, putting the limits right next to the top and bottom, over-dramatized the data.

There was another issue that I had with Stossel’s graph, which is that without showing a longer history, it is hard to say how our economy is stacking up against past economies.   And also, this was only the U.S. Data being shown, so I wanted to see how the U.S. economy was doing against other world economies….  So I did some quick work on the Internet and in Excel, and made this spreadsheet.  Here are some charts that I generated that I think paint a broader picture.  But obviously, each picture is more “muddled” by the facts…  (And a keen reader will notice that the “facts” appear to change in the OECD Data, which is likely due to there probably being different definitions being used.)

U.S. EMRATIOs at Full Scale

U.S. EMRATIOs During Presidencies

World Wide EMRATIOs

In the end, my personal belief after looking at this data and past data is that the early term policies of Obama and the congress (which were the late term policies of George W. Bush), stopped the bleeding that was caused by issues during George W. Bush’s time in office.  Now we are likely in a great stagnation, but that this only partly has to do with the president, has a bit more to do with Congress, and has even more to do with the trends of technology.  And it is that last part, the trends of technology, that if we stay blind to, we will find ourselves in some deep trouble.  And it is also that part, that I hope to share more about in the future.

 

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Written by Jacob Walker

February 20th, 2014 at 4:59 am

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