Wednesday, February 16, 2011

Lies, damned lies, and statistics.

Hi there,
todays post ist about statistics, again.
Thats because I discovered a really interesting example of how statistics can be misused if not understood correctly.

The quotation which my follower -DO- used "glaube nie einer statistik die du nicht selbst gefälscht hast" what reinterprets as "Never believe a stat that you did not fake on your own" or just "Lies, damned lies, and statistics."
is what brings it to the point.

The german Tax office uses the Chi-Square-Distribution to uncover irregularities in the billing of companies.
What they do is, they use the Chi-Square-Distr. to meassure the number of the figures 0 to 10 on each position of a Value which is listed on the Bill.
The result they get is the deviation of which should be the actual number (They expect each figure to come up equally)
And if the deviation is too high they assume that the bill has been rigged.

What they often do forget is, that this deviation only expresses that the values aren't coincidental but have a certain reason. This reason can be a lot of things, and by no means it has to be that the bill is manipulated.
The reason for not coincidental values can be a lot of things, especially in smaller firms or businesses with a uncommen price strategy there can be prices which only end in .00 or .50, which naturally makes values of .00 and .50 much more likely than any other value.
But, of course, if they invested time in doing the allmighty Chi-Square-Distribution there must be something wrong and so you'll get problems with the taxoffice, just because they don't know what they are doing.



Because there are no interesting youtube clips, other than explanations of Chi, the daily video is a litte smooth jazz from the fabulous Avishai Cohen Trio. Enjoy!

50 comments:

  1. Zahlen....smooth song. Makes this day less grey.

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  2. As a market researcher I'll tell you most statistics are misused! Enjoyed the read, thanks, I'll be sure to pop back!

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  3. wow you translated it :D
    valuations like this dont make sense and they are not accurate, just like the grading in school

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  4. i had a statistics exam last week that went really bad. and you just remembered it :\

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  5. Absolutely amazing! thanks for finding and sharing!

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  6. amazing. really nice work here dude

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  7. Good points. followed for more tips.

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  8. And this is why I dont miss statistics at all...

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  9. Interesting read, didnt check the video though

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  10. not sure about the post, but the video was good

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  11. Math isn't my strong suit :X
    Always up for some good music though!

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  12. Nice :) the video is really great ;D

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  13. statistics, statistics, statistics. Everything on the internet is based on statistics.

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  14. Very interesting statistics you posted. It's definitely some good information to know.

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  15. thats life -.- but interessting vid thx

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  16. I've never been a statistics fan, but the video was awesome

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  17. damn im in pre cal right now but im heading that path towards statistics

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  18. Nice post, love the vid. Now searching for more of him.

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  19. So that's how they detect tax evasion.

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  20. Trying to keep this in mind everytime I watch the news and so on.
    "70% of people like to... " Don't really mean 70% of people, to get that number you'd have to ask/test 100% of the population.
    And many studies are glad if they get to ask 1% of their targets.

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  21. Statistics can be very misleading. A good writer can have you believe anything is true using statistics, even if it's blatantly NOT true.

    Following and supporting..

    http://garagezoku.blogspot.com

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  22. Interesting post better video.

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  23. Very interesting about the German tax office. I'm intrigued about your blog; I'll definitely be following!

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  24. 77% of jazz is 100% awesome. Nice blog, followed.

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  25. im taking an accounting class and this is a good read. Also, the tunes are pretty classy too

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  26. speaking of statistics, im gonna fail that class

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  27. Hearing that was one of my favourite parts of stats class, haha. It can really apply to all figures though. With the right assumptions, you can make anything work!

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  28. Never did very well in stat but I like the jazz.

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  29. Interesting read, for sure. I can dig the music, though. Nice blog. :)

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  30. Don't you know, 4 out of 5 statistics are made up :D

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  31. nice song to go along with a rather weird story about German statistics.

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  32. im really liking this music you post ;)

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  33. There was a really good article in New Scientist last week about how medical statistics so often are represented in the media.

    It's so easy to misrepresent something that everyone does. Also, governments like to pick on small businesses as it's an easy target. Multinationals, are just that, they can pick up and move whenever they like.

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