Statistics in Wonderland
The Fallacy of Averages OR Spreading it Around?
[NOTE: If you can suggest a better title, I'd be glad. Am not happy with any I've given it.]
Take a happy group of 10 survivors on the bead economy.

When we first meet them the bead distribution is:
One lucky beado with 90 beads;
one poor beader only 10;
eight get 50 beads each.
Total 500, average 50 beads.

'Big Boy Beado' gets tax cuts and subsidies - funded by cutting general public physical and social infrastructure and ‘middle class welfare’ - does beadstock option speculation - partially funded through cutting company workforces, and wages and conditions, &c. of average working beaders (moving beads from them to him*). ‘Disadvantaged’ Beadie gets social equity beadfunding from the government to 15 . One lucky / clever / cunning BeadHolder more than doubles his to 110 (maybe in Microsphere shares or real beadstate).

Now we have:
BBB with 225 beads instead of 90;
DB gets 15 instead of 10;
BH has 110 instead of 50; and
seven little beaders only have 25 where they had 50.
Total 525, average 52.5 beads each.

"We’re ahead!", cries the Tribal Council. "Average beads are up!" and "The poor are better off!" and "The pie is bigger!" they crow.

But 7 of 10 are worse off beadwise, & underlying social/infrastructure support for all is less. Even the poorest is worse off compared to the highest (earlier 10/90 (=1/9th) is greater than current 15/225 (=1/15th)).

Which do you think is a happier & more cohesive group; before or after?

[*If they do have shares, or their superannuation trustee has, their dividends or equity increase is far less each than that of a very large beadshare holder - rather like the difference between what you personally could do with the $3-$4/week recent average tax cut and what the government could do with the total]
[permalink][comment] - posted by Mez @ 10/10/2002 12:37:00 am