A cycling and flow of knowledge and ideas.

Monday, 28 December 2015

Lies, statistics and the value of nothing.

The value of nothing!

"Accountants, they know the price of everything and the value of nothing."
A quote typically heard from people who are blindly foraying into financially dodgy terrain. Knowing the value is just as important as knowing the price and more importantly, what is known as the "bottom line."
In business the bottom line is the price point where below which, it's potential catastrophe. If you know you're pitching below the bottom line, then you know you're gambling on some future event, as you're surely not doing it for a demonstrable financial gain. The big "but," is that you must know where the "bottom line" is, so you can take any decision with both eyes open.

  • First rule of gambling is, "never" gamble more than you can afford to lose!

It's extremely handy to know where you are with price, as this can make any decision very simple.  If you're outside the safe region and in the gambling zone, then you need to either wait until the price drops or pay more emphasis to the "value" aspects. In relation to lighting the properties of value, could be seen as: heat dissipation, lighting quality, colour, aesthetics, running costs, maintenance cycle, etc.

  • In my view "price" is a subset of "value" and it doesn't define it! How else would you know a bargain?

If you want to evaluate some of the cost implications of changing lighting type, please see my previous post 10 steps to calculate a brighter future.  Originally written so I could evaluate the cost of an expensive LED replacement bulb I bought.  I wanted to see what the payback or ROI was.  "Not good," is all I can say about that particular purchase!

Damn lies and statistics

"There are lies, damned lies and statistics."

I once heard that particular remark from a pension provider's consultant/sales man.  A comment which immediately set me on edge.  What was running through my mind was: why is he trying to ridicule mandatory information, if it's not going to be in his favour to do so?

This scenario sounds like the tell-tale comment which goes: "Don't look at the small print, just buy what I'm selling you."  My immediate suspicion is: why are they trying to trivialise or obfuscate the small print?

  • Bitter experience has taught me always check the small print and if you have a salesman employing disarming comedy suggesting otherwise, then double check it with a fine toothed comb.

When things go wrong, what was originally said (communicated verbally) is quickly forgotten and it all becomes about the specific technicalities of the written small print. Although what was said is usually considered part of the contract, it's difficult to prove, if it were not actually recorded or witnessed by an unrelated third party.  Unfortunately, firms have no problem finding the most oblique small printed terms, which are never in your favour.

Statistics means little if you're unsure of the methods used to collate/compile them.  Statistics are rarely wrong, its just your understanding of them and their interpretation by others. Equally, if you're mathematically weak you can have the same information presented slightly differently and suggest completely different outcomes, although they are technically identical.

One of my favourite sayings is, "The statistics of one are never reliable statistics."

The statistics of one is just a reference to anecdotal statistics based on your experience or what you might have heard second hand. Although experience is valuable even if it is second hand, the outcome may actually have been cause by other factors which were not accounted for.  The whole philosophy behind statistics is to show if other factors may or may not be involved by shear weight of numbers. It is too easy to attribute an affect to something that was merely coincidental without proper statistical analysis.

When it comes to understanding how fast and loose politicians and the media can be with statistics, I find this radio programme absolutely riveting, almost addictive.  It is broadcast by the BBC and is called "more or less"

Here is a link to their catalogue of episodes.

But probably, that's just me. Anyway, I'm getting off my soap box after this random, non specific rant.

For further reading an references: Please read my resource page.

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