Wednesday, October 26, 2011

Lies, Damn Lies, and Statistics

No pictures today. I have no irritated photos.

Someone tell me what I am missing. Sincerely, I mean that. If I am wrong, I would like to know since ignorance is not a quality I desire to espouse. The theme of my irritation is best captured by the Mark Twain quote which forms this post's title.

First, taxes on investment income. I don't understand how this is more than a political slogan. I am not talking about the irony of taxing someone's earnings and then taxing the money he makes on his post-tax remainder. I am talking about the trickle down effect of almost every tax.

Am I not correct that any tax on investment income is going to either reduce the level of investment or increase the cost of investment? Based on what I know about economics, if investment profit is taxed at increased levels, that cost will simply be passed on. If in 2011 I could invest and earn a potential 5%, in 2012, with taxes on that profit, I will only invest if I think I can make the 5% plus the value of the additional tax. Otherwise, the risk of investment was raised without a corresponding rise in potential reward. So, if I now need assurance of a higher return on my investment, the company in which I invest needs to be confident of a higher profit so that it can pay me. The only consistent source of increased profit is to pass down those higher expenses to the consumer. So, in the end, taxing investment profits chills investment activity and incurs higher costs to the end consumer. I see no way around this inevitability.

Second, what is up with reporting (or what passes as reporting)? I increasingly get news reports which simply parroted  whatever is given to the reporter. Case in point: today I was listening to the public radio station. The report was on the success marked by the one year anniversary of the no texting while driving law. The proof of success was a comment from the original drafter of the legislation (he announced that the law was a success), and a few comments from some one in law enforcement who said that first, texting while driving was dangerous, second, that 162 citations were issued last year, and third, that the law was a success.

What??? How is it that passes for reporting? It's meaningless. I will not even try to explain all the hypothetical mischief that occurs with these kinds of statistics. My point will need to hang on the sufficiency of a few instead. For example, wouldn't the efficacy of the law be better shown if there were no citations (suggesting that people were so convinced of the purpose of the illegality that they completely gave up texting while driving)? Or, how about researching the number of inattentive driving citations given? If that number went down by about 162, doesn't that suggest that the law simply duplicated something already there? Or how about if they thought they would get 10,000 citations? Or what if they thought they would get 50?

The statistic of 162 citations, absent any real context, is completely useless. The whole point of reporting is to get a body of information which may not be readily available to the rest of the world so that we can be informed and make informed choices. There was no reporting going on here. No one asked the questions which would give meaning to a random fact. And, I guess, by extension, we are just supposed to accept that this law was necessary and good because we were told it was. That doesn't sound like me.

One quick note; I agree with the purpose of the law in that I have no interest in driving down the road with other drivers who are simultaneously texting. It is not the law I find frustrating. It is the reporting. Let me know what you think about these things and whether you believe I am missing something.

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