A case study in crap data put to meaningless use

❝ On Monday, I cast doubt on the many stories about how Black Friday retail sales were off to a disappointing start. This is an important story because retail is such a critical part of the U.S. economy, and because such a large share of the industry’s sales occur during the roughly five weeks between Thanksgiving and Christmas. But the more important point — at least for my purposes — is that the initial reports, thanks to the National Retail Federation, are a case study in how to obtain meaningless data and then put it to bad use.

❝ The NRF reported a 3.5 percent drop in spending. “Average spending per person over Thanksgiving weekend totaled $289.19, down slightly from $299.60 last year,” the organization said in a statement. This information was based on asking consumers how much they figured they would spend this year versus a year ago…

A lousy guess turns out to be wrong. Q’uelle surprise!

❝ I make a big deal about the retail trade group’s record of inaccuracy every year for a few reasons: it is important for investors — and indeed, citizens — to be grounded in reality. Most human progress is the result of the work of scientists, technologists and logicians who rely on facts and testable theories…

❝ This is crucial because retail sales are such a big deal. Almost 16 million people work in retail, or about 10.9 percent of the U.S. labor force. It accounts for a huge percentage of the overall economy. Retail sales provide a window into consumer sentiment, as well as corporate revenue, profits and investment decisions. By some measures, consumer spending counts for almost two-thirds of gross domestic product.

❝ …It is of course way too early to have the final retail sales data, but we do have some early numbers based on actual sales. First Data Corp., a point-of-sales transaction processor, says that it examined data from almost 1 million merchants and concluded that sales so far this holiday shopping season are up 9 percent from a year earlier. Furthermore, perhaps in a sign of the state of the industry’s health, sales of electronics and appliances rose 26.5 percent, compared with a lackluster 2.3 percent gain last year. First Data also found that the average transaction grew by more than $41 year over year.

Oh.

❝ First Data noted that its analytical methodology “is based on actual consumer transactions rather than surveys or speculation.” The company has access to this information because it processes actual credit-card and debit-card transactions.

RTFA. We’re in an extended season of mediocre surveying, surprising results, poor planning afflicting anyone making decisions based on “truthiness”.

Barry is speaking to investors; but, his point of view on hard data needs to be taken to heart across the spectra from politics to Giftmas shopping.

Thanks, Barry Ritholtz

Truthiness on the March

lucy-p-marcus
Lucy P. Marcus

❝ The late US Senator Daniel Patrick Moynihan famously said, “Everyone is entitled to his own opinion, but not to his own facts.” That may be true. But, entitled or not, politicians and electorates are constructing their own alternate realities – with far-reaching consequences.

❝ Nowadays, facts and truth are becoming increasingly difficult to uphold in politics…They are being replaced with what the American comedian Stephen Colbert calls “truthiness”: the expression of gut feelings or opinions as valid statements of fact. This year might be considered one of peak truthiness.

❝ To make good decisions, voters need to assess reliable facts, from economic data to terrorism analysis, presented transparently and without bias. But, today, talking heads on television would rather attack those with expertise in these areas. And ambitious political figures – from the leaders of the Brexit campaign in the United Kingdom to US Republican presidential candidate Donald Trump – dismiss the facts altogether…

❝ …The Iraq War was launched in 2003 under false pretenses. Intelligence reports had not established that there were weapons of mass destruction in the country, yet British Prime Minister Tony Blair dutifully followed US President George W. Bush in ordering his military to invade. The consequences of that decision are still emerging.

If our leaders can be so willfully wrong about such consequential matters, how can we believe anything they tell us? This question has opened the door for a new, more overt truthiness, espoused by the likes of Trump, who seems to introduce freshly invented “facts” on a daily basis. Trump’s surrogates, for their part, use television appearances and social media to restate the falsehoods, seemingly operating under the principle that if you repeat something often enough, it will become true…

RTFA for more details – if you need them. There is an added parallel example in the cupidity of British voters and how they were misled quite deliberately into the Brexit vote. Lies, agitprop both for and against voting at all. Not unlike Republicans who swear they haven’t a bigoted bone in their body – and never emit the slightest peep over that party’s vaguely-disguised voter suppression campaign.

Snopes’ Field Guide to Fake News Sites and Hoax Purveyors


Click to reach the story

I hope you’ve realized by now that Trump, the Alt-Right flavor of racists and bigots, know-nothings and nutballs, aren’t going to disappear the day after the election. Aside from deliberate hoaxters – who think they contribute to humor – the truthiness brigade of white nationalists and conspiracy nutballs will roll right along.

There are sufficient nooks and crannies in the Web and uneducated American brains to store their lies and slander for centuries. But, please, don’t get used to it. Among other resources, check in with snopes.com every now and then. Please.