Numbers That Lie (Or Do They?)

Everybody likes statistics. (Well, almost everybody.) If you're into sports, you want to know how many points Kobe scored in the NBA Finals (unless you hate the Lakers). If you're into websites and social media, you want to know how high your Alexa ranking and placement on Google is. (Had to get that in there.) And if you're into Real Estate, you want to hear numbers that indicate a market in recovery and not a double-dip.

But there's something about statistics not to forget. And that something is this: They don't always tell the whole story (ya think?), can be manipulated to portray what's not true (ya think again?) and there are those who will abuse statistics in just such a way.

Mark McGwire hit 70 home runs in the 1998 baseball season (the stats say), but he was on steroids. The housing market is in recovery (some stats and "experts" say), but it's been on steroids, too? (The federal government has been propping it up with the Homebuyer Tax Credit. It has since expired.)

And to develop this whole area of Real Estate statistics a little further: Let's just say you sold 100 houses in 2008. In 2009, you sold 50 houses. That's a 50% decrease in sales compared to 2008. Not good. (Stay with me.) Now, in 2010, you will end up selling 55 houses, a 10% increase in sales over 2009 - and somebody (the media or an NAR spokesperson?) will jump up and down shouting, "Recovery, recovery," when the truth really is a tiny bit different. In our hypothetical scenario, sales are still way down (-45%) compared with 2008. Not good again.

And I guess the point is sometimes the numbers do lie. Oh wait a minute. I made a mistake. Numbers don't lie. People do. (Be discerning.)

(Picture above under the GNU Free Documentation License: HERE.)