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Beware of politicians brandishing statistics

Written By: - Date published: 8:00 pm, April 16th, 2011 - 9 comments
Categories: cost of living, john key - Tags:

John Key wants to talk about how average after tax wages have gone up since he became Prime Minister. But as Brian Fallow says in today’s Herald:

Averages are all well and good. If John Key walks into a room the average net worth of the people in the room shoots up, but the rest of them don’t suddenly get any richer. It’s the median income that counts – that’s the point where as many people earn more than that as less than that. Statistics New Zealand says that according to its annual income survey – a more comprehensive set of data than the quarterly employment survey – 63 per cent of wage and salary earners have hourly earnings lower than the overall average for wage and salary earners.

It can also be argued that what matters for living standards is household incomes, not individual incomes, and that people get income from a range of sources other than wages and salaries – superannuation and benefits, investment and rental income, their own businesses and so on. If you look at the annual income survey, the median household income from all sources in June 2008 was $1271 a week, but had fallen to $1236 a week by June last year. The fall was even larger when adjusted for inflation. In real terms the median household income was $80 a week or 6 per cent lower.

He concludes:

So depending on your point of view and which data you select, you can claim that people are 6 per cent better off or 6 per cent worse off.

No prizes for guessing which data John Key wants to talk about – he wants his income in the mix to make his recession sound better. And good on Brian Fallow for pointing this out. It’s what Marty G has been saying on this blog for years;makes me feel a bit better about his moving on.

9 comments on “Beware of politicians brandishing statistics ”

  1. Gooner 1

    It’s what Marty G has been saying on this blog for years…

    Yeah, but this is a blog.  Blogs, despite what we might believe, don’t have that much influence.  Unfortunately for us bloggers, if Joe Average reads something in Granny, and the same thing on the internet, they are more likely to believe it from Granny, rather than the website.

    • felix 1.1

      Except it is in Granny. Most of the post is quoted from Granny.
      Oh I see, you were reacting to the bit where Mike said it’s in Granny because of Marty banging on about it.
      Which, err, doesn’t exist. Sorry for the interruption, you can get back to your fantasy now.

  2. “So depending on your point of view and which data you select, you can claim that people are 6 per cent better off or 6 per cent worse off.”

    Actually, Brian Fallow is wrong. That statement is not true.

    On the minimal assumption that ‘people’ refers to the majority of all people (income earners), the best measure of central tendency to understand how the majority of all the people are doing is the median.

    The average is not a measure of whether the majority of people (income earners) are better or worse off. That’s the whole point of the difference between the arithmetical average and the median.

    It is also not a matter of “point of view” since the only other point of view here is one that is not looking at whether or not the majority of people are better off. It is clear that Key is making this statement out of political rather than statistical concerns. That is, his concern is not to show that the majority of people (income earners) in New Zealand are better off but, instead, to give that impression.

    • Frank Macskasy 2.1

      Actually, it’s totally irrelevant whether John Key, Brian Fallow, or Uncle Tom Cobbly is right.
      What really matters, in the final analysis is how people – voters – feel on Election Day.
      Do they feel any better off when they hold their two ballot papers in their hands, ready to put those ticks down.
      Because if they don’t feel any better off; and they resent John Key’s 2008 election promise to raise incomes closer to Australia; and they have a pile of bills waiting for them at home…
      Then they will vote accordingly. Never underestimate a grumpy voter on Election Day.

      • rosy 2.1.1

        The next problem is how to get those grumpy voters to vote when they think there is no-one to vote for. As it stands it is likely they do not feel their interests are represented by those in parliament now.

        • Draco T Bastard

          As it stands it is likely they do not feel their interests are represented by those in parliament now.

          That’s because they aren’t represented by those in parliament. Those in parliament represent the corporates and no-one else.

      • Lanthanide 2.1.2

        You’re assuming these grumpy voters who feel worse off actually make it to the voting booth.

  3. Grant 3

    This govt has rooted NZ to the point that it is irrecoverable, who would want to be elected now?…maybe this was a strategy of the nasty nats!

  4. Takere 4

    Yeah, just like the “90 day hire & fire” laws. After analysing the report from the dept of employment relationship services who conducted the survey. They changed the law with only 132 employers involved/completed the survey & and less than 20 people taken on into full-time employment! Only 350,000 more jobs to go!!

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