Whose Bad Guess is More Bad? Difficult Comparisons

October 29, 2014
Jay Livingston

How to compare percentages that are very different? 

A recent Guardian/Ipsos poll asked people in fourteen wealthy nations to estimate certain demographics. What percent of the population of your country are immigrants? Muslim? Christian?

People overestimated the number of immigrants and Muslims, and underestimated the number of Christians. But the size of the error varied.  Here is the chart on immigration that the Guardian published (here).

Italy, the US, Belgium, and France are way off. The average guess was 18-23 percentage points higher than the true percentage.  People Japan, South Korea, Sweden, and Australia were off by only 7-8 percentage points.

But is that a fair comparison? The underlying question is this: which country is better at estimating these demographics? Japan and South Korea have only 2% immigrants. People estimated that it was 10%, a difference of eight percentage points. But looked at another way, their estimate was five times the actual number. The US estimate was only 2½ times higher than the true number.

The Guardian ranks Hungary, Poland, and Canada together since they all have errors of 14 points. But I would say that Canada’s 35% vs. 21% is a better estimate than Hungary’s 16% vs. 2%.  Yet I do not know a statistic or statistical technique that factors in this difference and allows us to compare countries with very few immigrants and those with far more immigrants.* 

My brother suggested that the Guardian’s readers could get a better picture of the differences if the chart ordered the countries by the immigrant percentage rather than by the percentage-point gap.

This makes clearer that the 7-point overestimate in Sweden and Australia is a much different sort of error than the 8-point overestimate in South Korea and Japan. But I’m still uncertain as to the best way to make these comparisons.

* Saying that I know of no such statistic is not saying much. Perhaps others who are more familiar with statistics will know how to solve this problem.

Shootings and Elephants

October 25, 2014
Posted by Jay Livingston

Why would an apparently happy kid shoot several classmates? That seems to be the question that’s getting the attention of the press and perhaps the public. “Struggling to Find Motive,” said one typical headline. That’s the way we think about school shootings these days.

It’s unlikely that any of the motives that turn up will be all that strange. Fryberg may have been upset by a racial comment someone had made the day before or by a break-up with a girl. He may have had other conflicts with other kids. Nothing unusual there.

But “why” is not the question that first occurs to me. What I always ask is how a 14-year old kid can get his hands on a .40 Beretta handgun (or whatever the weaponry in the shooting of the week* is).  For Fryberg it  was easy. The pistol belonged to his father. Nothing strange there either.  Thirty million homes in the US, maybe forty million, are stocked with guns.

Do European countries have school shootings like this? Surely kids in Europe get upset about break-ups; surely they must have conflicts with their classmates; and surely, some of them may become irrationally upset by these setbacks.  So surely there must have been school shootings in Europe too.

I went to Wikipedia and looked for school shootings since 1980 (here and here).  I eliminated shootings by adults (e.g., Lanza in Sandy Hook, Brevik in Norway). I also deleted in-school suicides even though these were done with guns and were terrifying to the other students. I’m sure my numbers are not perfectly accurate, and the population estimate in the graph below  is based on current numbers; I didn’t bother to find an average over the last 35 years. Still the differences are so large that I’m sure they are not due to technical problems in the data.

Does the US have a much greater proportion of kids who are mentally unstable? Do our schools have more bullying? Are European kids more capable in dealing with conflicts? Are they more stable after break-ups? Do they spend less time with violent video games? Do their schools have more programs to identify and counsel the potentially violent?  I’m not familiar with the data on these, but I would guess that the answer is no and that our kids are no more screwed up than kids in Europe. Or if there are differences, they are not large enough to explain the difference in the body count.

No, the important difference seems to be the guns.  But guns have become the elephant in the room that nobody talks about.  Even asking about access to guns seems unAmerican these days.  Thanks to the successful efforts of the NRA and their representatives in government, guns have become a taken-for-granted part of the landscape. Asking how a 14-year old got a handgun is like asking how he got a bicycle to ride to school.

When the elephant’s presence is too massive not be noticed – for example, when the elephant kills several people –  the elephant’s spokesmen rush in to tell us that “No, this is not the time to talk about the elephant.”  And so we talk about video games and psychological screening and parents and everything else, until the next multiple killing. But of course that too is not the time to talk about elephants.


* Yesterday’s killing was the 39th school shooting in the US this year.  Most of those got little press coverage. Unless someone is actually killed, a shooting might not even get coverage in the local news.

Risk Managers Are Worried About Inequality

October 23, 2014
Posted by Jay Livingston

Who’s worrying about inequality? It’s not just the scraggly bunch that occupied Zucotti Park, and not just the lefty economists and sociologists hefting a copy of Capital in the Twenty-First Century. Professional Risk Managers’ International Association surveyed risk managers, and they too are uneasy about inequality.

The majority (62%) said that inequality poses a risk to the economy. Only 14% were like “What, me worry?”

I’m not sure what risk managers do, but I’m guessing  the profession does not draw many  socialists to its ranks. When you see this kind of concern coming from sources other than the usual suspects (I found this graph in a Wall Street Journal banking page – here), you begin to think that the wealth gap is more than just a moral issue about what is right and fair; it’s a threat to general economic well-being.

Et in Arcadia Inflation*

October 22, 2014
Posted by Jay Livingston

What do you do when your published predictions prove wrong? How do you resolve the dissonance between your ideas and the facts?

In a blogpost earlier this month (here), I looked at the responses of twenty-three economists who had written an open letter to Ben Bernanke warning of inflation unless he ended quantitative easing and tightened the Fed’s monetary policies. Bernanke ignored the warning, and inflation didn’t happen. I made the analogy between their responses and those of the religious millenerian cult described in When Prophecy Fails.

When asked about their error, none of the economists even considered that their ideas might have been wrong. Instead, their reactions to the reporter’s questions were:
  • Ignore. Several of them didn’t respond to the query.
  • Deny. Some said that everything they had predicted had indeed happened.
  • Equivocate. Some said that they had not issued a prediction but only a “warning.” Others pointed out that they hadn’t specified a date that the inflation would start.
  • Proselytize. Most are still trying to donvince others that their  ideas are correct.
I added that for purposes of reducing dissonance, it helps to get others others to confirm your ideas by agreeing with them, publishing them, and especially paying for them. These affirmations from other people  seem to be as effective as confirmation from the facts. Now Amity Shlaes, one of the 23 letter-signers,  has expanded her reaction, and the National Review has published it.*

Well, inflation hasn’t come on a big scale, apparently. Or not yet. Still, a lot of us remain comfortable with that letter, since we figure someone in the world ought always to warn about the possibility of inflation. Even if what the Fed is doing is not inflationary, the arbitrary fashion in which our central bank responds to markets betrays a lack of concern about inflation. And that behavior by monetary authorities is enough to make markets expect inflation in future. [source: NRO]

I’m struck by the moralistic overtones, which suggest that this isn’t just a matter of economic theory. It’s about faith, about good and evil.  Inflation is sort of like Satan – supremely evil and always lurking even when you can’t see it. Note the “apparently” at the end of the first sentence – a bit like a millenerian saying that apparently the earth had not been destroyed, and apparently the UFO aliens hadn’t landed to save the faithful.  But it will still happen (“Or not yet.”) So we must not let our guard down. Bernanke and now Yellen “betray” a lack of concern. 

The distrust of quantitative easing sounds as much like Puritanical ethos as economic theory.  With their policy of “easy money” – as opposed to money we must work hard for – the Fed chiefs are luring us toward sin and ultimately destruction (or at least inflation), much like the governors of Pleasure Island in Disney’s “Pinocchio.”**

* The title of the post is variant of in arcadia ego.  “‘Even in Arcadia, there am I’. The usual interpretation is that ‘I’ refers to death, and ‘Arcadia’ means a utopian land. It would thus be a memento mori,” a reminder of death. [Wikipedia]

** Earlier posts using this Pinocchio-and-political-Puritanism analogy are here
 and here.