Tuesday, March 31, 2009

Studying the Use of Data

First of all, the germ for this post comes from a discussion with colleague who teaches AP Econ here at Collegiate. Discussions with him are definitely a fringe benefit.

Last night on CNN's Anderson Cooper, one of the top stories was the auto industry. Within the story was an example of how people often use statistics incorrectly to carry their story. I went to the website and pulled it up. The relevant portion begins about 4:30 into the broadcast and ends about two minutes later. After discussing the GM and Chrysler situation, the reporter uses a large map to show the states where over 100,000 people are employed in some aspect of the auto industry (suppliers, production, and sales). He then enlarges the map to include states where over 10,000 people are employed in the auto industry. The reach is significantly farther, as one might expect. I think the take away was supposed to be that if even one of the auto producers goes bankrupt, the jobs will disappear. If I'm right, is that statement disingenuous?

You can show the clip to your students and ask them the same question.
Ask your students these questions before they answer:
1) Are we talking about one company, two companies or all the companies? (Does the opening graphic relate to all companies or specific companies?)
2) Of all the jobs represented by the map, what's the spread of jobs related to each particular company? (Which of the jobs are GM, Chrysler, Ford, Toyota, Honda, Hyundai, etc., or doe we know? Would that change the map if we talked about one company vs. all companies?)
3) What type of bankruptcy are being considered? (Is it a Circuit City liquidation or United Airlines restructuring while continuing operations?)
4) If a company goes under, will the customers of that company stop buying cars altogether?

5) Does the fate of one company automatically doom the entire industry or only that portion tied to that company? (Which may or may not be significant, depending on the company we're focusing on.)

Admittedly, the way the story was told made for better "news". But, I'm not sure we are served well if we are given data that does not support the story well. Stories with better information, more depth and deeper questions might make for a better informed and educated public.

I look forward to your comments.

This post relates to the following Keystone Economic Principles:
3. All choices have consequences.
4. Economic systems influence choices.
7. Economic thinking is marginal thinking.

There's a marginally more helpful map included as part of a story in today's (Wednesday, 4/1/09) issue of The Wall Street Journal. It shows the location of GM and Chrysler auto production facilities. It adds some clarity, lacks other clarity. For example, while locating the parts plants as well as assembly facilities, it does not include dealerships which were included in the Anderson Cooper piece.

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