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!

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48 comments:

  1. SidewayzFebruary 16, 2011 at 11:20 AM

    what... i dont even...

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  2. ScanonFebruary 16, 2011 at 11:27 AM

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

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  3. BaxStarFebruary 16, 2011 at 12:06 PM

    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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  4. jopjopjopFebruary 16, 2011 at 12:07 PM

    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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  5. lloyd redgraveFebruary 16, 2011 at 3:40 PM

    Love the jazz man, real smooooth

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  6. S.S.February 16, 2011 at 3:45 PM

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

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  7. D22 ZoneFebruary 16, 2011 at 4:08 PM

    Absolutely amazing! thanks for finding and sharing!

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  8. Jazz bazookaFebruary 16, 2011 at 4:20 PM

    amazing. really nice work here dude

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  9. Improve your Vocab!February 16, 2011 at 5:08 PM

    nice post. it was an interesting read.

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  10. Todd AndrewsFebruary 16, 2011 at 5:31 PM

    Good points. followed for more tips.

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  11. JcacheFebruary 16, 2011 at 5:45 PM

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

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  12. pizzafuckyesFebruary 16, 2011 at 5:57 PM

    Interesting read, didnt check the video though

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  13. LexingtonianFebruary 16, 2011 at 5:59 PM

    Smoooooth jams

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  14. kaboomixFebruary 16, 2011 at 6:15 PM

    Brilliant read, smooth vid!

    *following*

    Unrelated Randomness

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  15. seth3rFebruary 16, 2011 at 6:51 PM

    like !

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  16. The GovernorFebruary 16, 2011 at 7:13 PM

    not sure about the post, but the video was good

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  17. WobblesFebruary 16, 2011 at 8:31 PM

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

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  18. NedyvaiFebruary 16, 2011 at 8:34 PM

    Nice :) the video is really great ;D

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  19. SpongeworthyFebruary 16, 2011 at 8:46 PM

    Sweet! Jazz!

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  20. BrendanFebruary 16, 2011 at 9:13 PM

    nice relaxing song

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  21. Brendan McCartyFebruary 16, 2011 at 9:26 PM

    great music!

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  22. PvtCarlinFebruary 16, 2011 at 9:29 PM

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

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  23. FTWFebruary 16, 2011 at 9:39 PM

    thats life -.- but interessting vid thx

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  24. AndrewFebruary 16, 2011 at 9:40 PM

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

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  25. AnonymousFebruary 16, 2011 at 9:45 PM

    I actual liked that, good job

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  26. pvFebruary 16, 2011 at 9:46 PM

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

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  27. SabineFebruary 16, 2011 at 10:16 PM

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

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  28. Chris C.February 16, 2011 at 10:29 PM

    So that's how they detect tax evasion.

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  29. GamerGanzFebruary 16, 2011 at 10:40 PM

    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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  30. SeanFebruary 16, 2011 at 10:49 PM

    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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  31. donga5000February 16, 2011 at 10:51 PM

    So smooooooooooooooth. ha

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  32. BasikFebruary 16, 2011 at 11:16 PM

    statistics can go to hell =D

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  33. ShockwaveFebruary 16, 2011 at 11:23 PM

    Ahh I love me some jazz!

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  34. BilboFebruary 16, 2011 at 11:24 PM

    Interesting post better video.

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  35. Ashton ChaseFebruary 16, 2011 at 11:38 PM

    Smooth jazz, classy haha.

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  36. Come At Me BroFebruary 17, 2011 at 12:07 AM

    I agree!

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  37. CharlesFebruary 17, 2011 at 12:13 AM

    jazz lol

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  38. MattFebruary 17, 2011 at 12:58 AM

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

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  39. SiphilFebruary 17, 2011 at 1:05 AM

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

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  40. Mr. RogersFebruary 17, 2011 at 1:59 AM

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

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  41. InnovationsFebruary 17, 2011 at 2:42 AM

    speaking of statistics, im gonna fail that class

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  42. ScottFebruary 17, 2011 at 5:27 AM

    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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  43. BobFebruary 17, 2011 at 9:15 AM

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

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  44. AnonymousFebruary 17, 2011 at 9:26 AM

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

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  45. RaZerFebruary 17, 2011 at 9:28 AM

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

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  46. helelsjsFebruary 17, 2011 at 8:31 PM

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

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  47. l33 v4n cl33fFebruary 17, 2011 at 11:24 PM

    im really liking this music you post ;)

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  48. WolfeFebruary 18, 2011 at 2:38 PM

    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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