Archive for April, 2010

Over-reacting to month-to-month economic statistics

In his column this weekend the Numbers Guy at Wall Street Journal, Carl Bialik, notes* how uncertain the monthly statistics for unemployment and the like can be.  For example, the Census Bureau reported that sales of new single-family homes fell to record low last month.  However, if anyone (other than Bialik) read the fine print, they’d see that the upper end of 90 percent confidence interval estimates an increase in sales!

“Most of the month-to-month changes are not only nonsignificant in a statistical way, but they are often straddling zero, so you can’t even infer the direction of the change has been accurately represented.”

–          Patrick O’Keefe, economic researcher

The uncertainty stems for the use of sampling as a cost-saving measure for government agencies and ultimately us taxpayers.  For example, field representatives covering 19,000 geographical units throughout the U.S. only sample 1 out of 50 houses to see whether they’ve been sold.

The trouble with all this uncertainty in statistics is that it ruins all the drama of simply reporting the point estimate. ; )

*(See “It Is 90% Certain That Unemployment Rose. Or Fell.” and a related blog on “What We Don’t Know About the Economy” )

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A wonderful pairing: Baseball and statistics

I managed to procure a seat to the opener yesterday for the new Minnesota Twins baseball stadium (Target Field) in Minneapolis.  Although many questioned the wisdom of leaving it open to the elements, dire predictions of early games being snowed out did not materialize, at least this year.  In fact, we enjoyed an unseasonable warm day while watching the hometown club defeat the Boston Red Sox to rousing cheers of the nearly 40,000 fans in attendance (39,715 to be precise).  Many of the statistics for the landmark game are captured in this ESPN boxscore.  Oh, oh, here I see an anomaly – the attendance reported at only 38,145 (96.6% full).  My hunch is that the other 1,030 fans might be found at hometown hero Hrbek’s Bar – a spacious gathering spot in the stands of the Target Field.

Although the pre-game festivities and competition provided great entertainment, I eagerly awaited the breaks between half-innings to peruse the details in the Minnesota Twins 2010 Record and Information Book – a 396 page tome filled with 6 point type.  Nearly every page features a statistic biased in favor of the team or a particular player.  This is done by focusing on one specific attribute and then choosing the time frame which puts it in the most flattering light. For example, we learn on page 122 that “Anthony Swarzak became the first starting pitcher in club history to pitch 7.0 scoreless innings in his Major League debut.”  I like the way they put the carry the statistic to the tenth’s decimal. : )

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Creativity defeats sensibility for paper helicopter fly-off

Twice a year I teach a day on design of experiments (DOE) at Ohio State University’s Fisher College of Business.  The students are top-flight executives seeking six sigma black belt certification.  To demonstrate their proficiency for doing DOE, I ask them to break into teams of three or four and, within a two hour period, complete a two-level factorial on paper helicopters.*

It’s always interesting to see how intensely these teams from industry compete to develop the ‘copter that flies longest while landing most accurately.  However, this year one group stood out as being less competitive than the others.  Therefore, I was very surprised that they handily won our final fly-off.  It turns out that one of their factors was dropping the helicopter either wings-up or wings-down – the latter configuration being completely non-intuitive.  It turns out that going upside down makes it easier to drop, the flight time suffers only slightly and the flight becomes far more accurate – a premium in my overall scoring.

“The chief enemy of creativity is ‘good’ sense.”
– Pablo Picasso

Ironically, another team who benefited from having an expert in aeronautical engineering and a very impressive work ethic all around – they did more runs by far than anyone else – never thought of flying the ‘copters upside down.  In fact, their team leader objected very vigorously that this orientation must not be allowed, it being clearly unfair.  Fortunately, other executives in this black-belt class hooted this down.

I thought this provided a good lesson for process and product improvement – never assume that something cannot work when it can be easily tested.  That’s the beauty of DOE – it enables one to screen unknown (and summarily dismissed) factors to uncover a vital few that often prove to be the key for beating the competition.

*I also do this experiment for a class on DOE that I teach every Spring at South Dakota School of Mines and Technology.  In fact, I am writing this blog from their campus in Rapid City where I’ll be teaching class tonight.  For details, pictures and results of prior experiments here and at OSU, see this 2004 Stat-Teaser article on “Playing with Paper Helicopters”.

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