On the Surface, It Just Makes No Sense

The average American is not very good with numbers.

A recent report on medical treatments show that potential patients were much more likely to agree to a procedure if the potential outcome was described as a 70% chance of success instead of a 30% chance of failure, even though the two are exactly the same.

Such reports make me shake my head.

Lest you think that such poor critical math skills only apply to the great unwashed, I was recently surprised to find such reasoning in a story in The Wall Street Journal.

On the surface, the statistics described in the article floated right by because they’re so widely quoted. But if anyone had taken just a minute — a mere 60 seconds — to consider the information, it would have been clear that the typical conclusion makes no sense.

And yet, here was the prestigious business paper of the U.S., putting the data front and center… which is what annoyed me so badly. To make it worse, a different story in the same issue of the paper had refuting information.

On February 13, Neil Shah wrote an article about Americans living longer and therefore having more chances to tie the knot.

Shah’s first point was that while many Americans divorce, the rate of remarriage is quite high.

His second point was that since we live longer than previous generations, it gives us more opportunities to try nuptials a second, or even third time.

Lastly, he went on to say that people are marrying for the first time later in life. Adding that this trend masks the fact that our increased life span means we’re marrying much earlier in our overall lifetimes.

Not exactly…

Mr. Shah points out that today, the typical man marries at 29 — well above the low average age of marriage of 23, recorded in 1956 — only three years more than the average age of marriage in 1890.

Since, according to Mr. Shah, the average life span in 1890 was only 43 years, men were marrying just over halfway through their lives. Now, when our average age of death is 76, men are marrying in the first third of their lives.

Every time I hear this sort of thing, I just want to smack someone!

There is no question that the average age of death in the 1890s was 43, and the average age of death now is near 76.

But this doesn’t mean that people experienced the averages. It doesn’t work that way!

Before the 1920s, infant mortality was exceptionally high. If all deaths before the age of five are excluded from the figures, then life expectancy in the late 1800s shoots up to the 60s, which makes a lot more sense.

If all deaths in the ’20s and ’30s, arguably related to wars, were excluded, the numbers would rise to near 70.

If people were dying near age 43 before the 1920s, then there would be no stories about old people. As I pointed out to Mr. Shah via email, even his own paper knew better.

In fact, in the very same edition of The Wall Street Journal, there was a story on the “Presidential Bible Class,” recounting how different presidents read and referred to the Bible.

Among them was Lincoln, who began the Gettysburg Address with: “Four score and seven years ago…”

As the author of the story points out, young people might find the language stilted, but those familiar with the Good Book would recognize the words from Psalm 90:10, which describes the stretch of a man’s lifetime as “threescore years and 10; and if by reason of strength they be fourscore years.”

Hmm.

So in Biblical times, a man lived to be 70 or, if he was really strong, 80, and yet here we’re acting as if people expired at 43 in the late 1800s. Just because an “average” told us so!

Sometimes you’ll find that a widely reported number — one that people rely on for all sorts of estimates and calculations — bears no resemblance to reality… even if it’s technically correct.  Given that we all rely on statistics — and the conclusions we draw from them — to make decisions in our lives, it is in our best interest to view them very carefully, even when they come from a reputable source.


Rodney

P.S. By the way, I contacted Mr. Shah to point out the discrepancy. He responded, acknowledging the fact, but stuck to the basic premise of his article. As the old adage goes: You can lead a horse to water, but you can’t make him drink.

 

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Categories: Foreign Markets

About Author

Rodney Johnson works closely with Harry Dent to study how people spend their money as they go through predictable stages of life, how that spending drives our economy and how you can use this information to invest successfully in any market. Rodney began his career in financial services on Wall Street in the 1980s with Thomson McKinnon and then Prudential Securities. He started working on projects with Harry in the mid-1990s. He’s a regular guest on several radio programs such as America’s Wealth Management, Savvy Investor Radio, and has been featured on CNBC, Fox News and Fox Business’s “America’s Nightly Scorecard, where he discusses economic trends ranging from the price of oil to the direction of the U.S. economy. He holds degrees from Georgetown University and Southern Methodist University.