business news in context, analysis with attitude

by Michael Sansolo

To paraphrase Mark Twain, There are three kinds of falsehoods in this world: lies, damn lies and statistics.

The problem is we all rely heavily on the last one and have to keep a wary eye on all the ways simple numbers can mislead us. We got a few interesting examples of this in MNB Monday, when Kevin skeptically quoted studies finding how few American claim to shop on Thanksgiving.

As he correctly point out, if the stat seven percent - is correct, who were all those people at the stores last year?

That’s hardly the worst statistic I’ve seen lately. In a recent study, Americans were asked about the current unemployment rate. The response should shock you: 32%. Now you may believe the official rate of 5.9% is slightly off or fails to properly count those who have given up looking or have taken jobs that are well below their skill levels. But 32%? Honestly!

If that were the case we’d be referring to the Great Depression in nostalgic terms. (And this isn’t a uniquely American issue. The same survey found an even great exaggeration among Italians.) And, to be fair, this US study was an outlier, suggesting numbers far higher than other, similar surveys.

The quandary is figuring out what’s real and what people think is real. MarketWatch has an interesting article about the problems with surveys explaining that Americans way overestimate the rate of teen pregnancies and the size of the immigrant population, while underestimating things like the percentage of folks who vote or are of Christian faith.

But the unemployment number is especially troubling.

Looked at one way it would send a clear message to the food industry that the country remains far more pessimistic about the current economy and would easily explain the continued emphasis on frugality and cost cutting.

But looked at another way, it would make us wonder if shoppers really have a good sense of the current economic state of affairs, which casts into doubt whether we market to their perceptions or realities.

Either way there is no definitive answer and that’s why surveys, while so incredibly valuable, have to always be viewed in context. Far too often the survey is skewed by the way questions are posed, the purity of the sample or any number of factors. That's why it is so important that we understand that sometimes numbers can only help us if we find out a way to put things into perspective.

Keep in mind also that surveys can only tell us about what people already know. There’s a famous example that if people in the 1890s were asked to identify quicker modes of transportation they would have likely answered faster horses. They couldn’t select cars because they were unaware of them.

In the same way, all of us were unaware of smartphones, social media and countless other innovations until they became realities. Innovations by their nature change the playing field and shift what consumers want or need to have.

So yes, survey away. Keep asking questions and keep mining those reports for insights because they can be found.

But at the same time, keep your cynical antenna high because what people say and what they do can be two very, very different things.

Michael Sansolo can be reached via email at . His book, “THE BIG PICTURE: Essential Business Lessons From The Movies,” co-authored with Kevin Coupe, is available on Amazon by clicking here. And, his book "Business Rules!" is available from Amazon by clicking here.
KC's View:
If I may … I think that something else is at work when people say things like they believe the nation's unemployment rate is 32 percent (and again, as Michael points out, this is one survey, not a trend among most surveys). I think the explanation can be found in the work of David Brooks and Pete Hamill.

It all comes back to our old friend, epistemic closure. We first referred to this phrase two years ago after it was uttered by New York Times columnist David Brooks, defining it as being so hemmed in by your own belief system that you are unable or unwilling to accept anything other than what you believe as being possible or factual ... it is the opposite of "empiricism," which is defined as the practice of relying on observation and experiment.

Pete Hamill's contribution is a phrase that I often quote here on MNB: "Ideology is a substitute for thought."

People on both sides of the political and cultural aisle often are so locked into their own views of the world that it skews their views, their logic and their statements. It doesn't surprise me that one-third of the population would say that the unemployment rate is so high simply because it falls within their ideological perception of the world … and I am sure that one-third of the population on the other end of the spectrum would say something equally outrageous and inaccurate because of their own ideologies.

They'd all be sure. They'd all be wrong. They'd all be guilty of epistemic closure.

So let me echo Michael's suggestions. Listen to the consumer. Pay attention to the numbers. But we have to keep an open mind, keep things in context.

Call it empiricism. Or maybe just common sense.