Day 5098: You Can Prove Anything With Statistics Un More Temps

Tuesday:

Ho ho ho Merry Christmas, and here’s Pollyanna Toytown in the Grauniad telling us that the Conservatories want to eat babies.

Polly’s clearly getting worried that Mr Ed won’t be delivering her cushy peerage a victory for social democracy anytime soon, as her language gets less believable by the day.

Today she’s claiming that “Only one in forty new jobs is full time”, citing the Workers Revolutionary Party(!) rather than the press release from TUC who came up with this statistic, presumably because the TUC use the word “Net” rather than “New”, a small difference but a significant one.


The TUC have arrived at their figure by taking the Office for National Statistics numbers for the amount of people in employment in summer 2014 and comparing them with the numbers from the start of 2008, before Mr Frown’s Government ran face first into the biggest crash in history.

The Coalition government like to do this too, because it shows that a million more people have jobs now than before the economy was wiped out under Labour.

And the figures do show that twenty-five thousand more people are in full time employment now than in 2008, which is indeed 25,000/1,000,000 or 1/40 of the total increase.

Think about it for a moment and see if you spot the flaw in the reasoning before I tell you.

Yes, that’s 1/40 is of the extra new jobs, not all new jobs.

This makes the TUC’s headline somewhat hyperbolic, but at least with a figleaf of honesty in that, pardon me, “safety Net”.

To switch the “net” for “new” makes the headline say a whole other thing.

So the question becomes, is Polly stupid or lying? I have to say that citing the Workers Revolutionary Party – when she is neither worker nor particularly revolutionary, and not much of a party animal either; despite her aspirations to influence, the defector to and then from the SDP usually ends up in a party of one – suggests that she was looking for the headline to match her prejudice.

For Pollyanna’s claim to apply to “one in forty new jobs” she would have to be saying that not one single full time job has been lost under the Coalition.

It seems unlikely that Ms Toytown’s message is that the Coalition are paragons of preservation when it comes to employment.

In fact, Polly – and the Labour Party – put it about rather a lot that the Coalition have caused the loss of a great many full time jobs (by implication “proper” jobs) and replaced them with part-time zero-hour (substandard) serfdom. And that is what this “one in forty” claim is trying to back up, to make you think.

But the figures actually show that just as many people (actually slightly more) have full time jobs now than before the Credit Crunch.

And there are a lot more people in part-time and self-employed jobs, who were previously without work at all.

Of course it’s not that simple. Some people who were in full-time jobs have lost them and not got new ones are now in part time work or unemployed. There’s genuine hardship and suffering about. And the real value – after inflation – of the wages from those full-time jobs may not be as much as they used to be in 2008 because we’ve been sharing the pain so that fewer people lose their jobs. We mustn’t forget that.

But Hard Labour cynically seek to capitalize on this politically by calling it their “Cost of Living Crisis”.

The recent cross-party report on hunger in the UK was remarkably fair and non-partisan. But again, almost immediately Hard Labour went for the self-interested spin and started crying crocodile tears over the “shame” of Britain’s Food Banks. (Germany, in fact, has more people using food banks.)

This point-scoring for their own ends undermines efforts to help end hunger. Labour don’t just put their own interests ahead of fixing things; they actually make things worse.

Polly Toynbee no doubt justifies her mendacity with the thought that Labour are “good” and so anything to get them into power, no matter how dishonest or harmful, must be “good”.

No doubt David Milipede justified British complicity in CIA torture with much the same reasoning.


Previously, Statistics Part Un

and Part Deux

Day 4916: You Can Prove Anything With Statistics

Tuesday:

(Warning: Contains Maths!)

I've seen a couple of people linking to this story: "British public wrongly believe rich pay most in tax, new research shows".


It claims that most people want a tax system that is fairer (good) but that they are wrong to think it's fair now (bad!).

Of course, this is a piece in the Grauniad cherry-picking from a report for The Equality Trust cherry-picking data from the Office for National Statistics and before you can say "confirmation bias" it's proved to the Internets that the Evul Condums are Evul.

Except, of course, it's not true.

Obviously, there's the usual exaggeration by some Graun sub-editor in the headline: we've lost the nuance of "as a proportion of their income". Of course the rich pay most in tax. 35% of more is obviously more. The question is do they pay a higher SHARE (we'll not even get into SHOULD they pay a higher share; we'll take that as read).

Then there's the point that the Equality Trust's research is actually a poll into public perceptions, NOT research into the effects of the tax system.

Just because they're a charity doesn't mean that we should not be cautious of this sort of polling – it's very similar to the sort of puff piece that marketing teams place in papers all the time, you know the sort of thing: "90% of housewives say sunny days are nicer says poll for insert name of suntan lotion retailer here". It's about getting their name in print – i.e. advertising.

Another point that's interesting is that the ONS data excludes Capital Gains Tax and Inheritance Tax, which amount to about eight billion quid between them, not a lot in the grand scheme of things – about 2% of all taxes, but more than cigarette duty which the figures do include – and these are taxes that tend to impact the higher earner more. But the report's methodology does say they specifically do mention Capital Gains Tax when asking poll respondents to think about the taxes that they pay. So you're asking people to remember a tax paid mainly by the better-off that you then exclude from your calculations.

In addition, the ONS figures show that most households benefit "in kind" mainly from state-provided schools and health service equivalent to about seven-and-a-half thousand pounds (which again is less for the top earners, I'd guess because of higher take-up of private schools and health insurance by those able to afford it). The Equality Trust report does not include this benefit in the "total of benefits and income" which they use to compute the tax rates. You may say "fair enough" (and I'd probably agree), but it is still a bit dodgy to ignore SOME of the ONS data you claim to be using.

And there's the very serious fact that the figures are based on EARNINGS, rather than WEALTH. Earnings at least demonstrate some work being done. It may not be entirely USEFUL work, but at least it's being done, whereas wealth, particularly when tied up in land, is more often a dead weight or leads to rentiering.

But, if we move past all of that there is still this BIG problem: the central assertion that the public believe that the tax system is fairer – and that they would like it to be fairer still (nicely coinciding with the aims of the Equality Trust, of course, but fair enough) – and that this belief is WRONG.

This rests on the claim that the tax system actually isn't fair. In fact, the report says in these words:

"The UK’s tax distribution is not only less progressive than the public’s perceived and preferred distribution, it is actually regressive when comparing the richest and poorest 10%"

This is, at best, in error and more than likely actually deceitful.

A regressive system would take money from the less well-off (in this example the lowest 10%) and transfer it to the better-off (i.e. here the top-earning 10%).

And that is very clearly NOT what is happening.

Why not? Because the way they have sliced the data is to compare income INCLUDING BENEFITS against taxes paid.


Here's now the report puts it:

10% of households with lowest income:
Total Income and Benefits: £10,253
Total Direct and Indirect Tax: £4,424
Income after taxes: £5,830
Effective tax rate: 43%

10% of households with highest income:
Total Income and Benefits: £101,291
Total Direct and Indirect Tax: £35,627
Income after taxes: £65,664
Effective tax rate: 35%

Cue shock and outrage!

But let's cut that data up a slightly different way:

10% of households with lowest income:
Total Income: £3,835
Total Benefits less Direct and Indirect Tax: £1,994
Income after tax and benefits: £5,830
Effective tax rate: -52% (yes, that's a negative tax rate of MINUS 52%)

10% of households with highest income:
Total Income and Benefits: £101,291
Total Direct and Indirect Tax: £33,424
Income after tax and benefits: £65,664
Effective tax rate: 34%

Clearly there is a net cost to the top 10% and a net benefit to the bottom 10%. Actually, all the lower four deciles (or 40% of households) receive more in benefits than they pay out in taxes.

The combined tax/benefit rates for all deciles are as follows:

Bottom: RECEIVE 52% (receiving more than paying)
2nd: RECEIVE 49%
3rd: RECEIVE 26%
4th: RECEIVE 13%
5th: PAY 9% (paying more tax than receiving benefit)
6th: PAY 15%
7th: PAY 24%
8th: PAY 30%
9th: PAY 33%
Top: PAY 34%

On that basis the tax and benefit system is pretty positively progressive.

Far from being wrong because the system is unfair, the public hugely underestimate how much the least-well-off are helped. (And probably just as vastly underestimate just how little the least-well-off get paid!)

Does this just mean we're playing with numbers matter? Does it just mean you pays your money and takes your choice? As Obi-Wan Kenobi puts it: "it all depends on a certain point of view". I don't think it does.

To ignore the fact that benefits are a part of the government's effect on household incomes is absurd; worse, it distorts the picture entirely. It suggests that the lowest-earning households actually pay more in tax than they earn altogether, which is clearly impossible.

It matters that statistics are used to tell a story that is true. And by abusing the ONS's numbers this report doesn't just discredit their own version – they discredit mine. People will just go (as my title suggests) "ugh, maths means nothing". Far too many CiF commentators are ready to leap to their own prejudices that Evul Condums are Evul and they pick the numbers that support that story.

(And there's enough "maths blindness" in the world as it is, without deliberately reinforcing it.)

As a Liberal I am anyway naturally wary of putting a society that is "more equal" ahead of a society that has more freedom.

I want to lift people out of poverty so that they are free to live their life the way they want; I care less about how much they earn after that, so long as it's a fair return for their work.

I do think that the tax system does need to be a lot simpler and clearer – it would be fairer if it were easier to understand what tax you pay.

And if we are to balance the government's budget then – like Cap'n Clegg – I say that it's right to ask the better-off to be first to contribute. I'm just not sold on raising taxes – particularly not to punitive levels – as a "good" in themselves. There MAY be something in "The Spirit Level" idea that more equal societies are healthier ones, but I find they (too) pick their evidence to agree with their case.

If we deplore – and we do – Tory (and Labour) ministers pushing the lie that "scroungers" and "benefit fraud" are bankrupting the economy, then we must equally deplore the reverse when I'll have to label them broadly "the left" say that the government are ripping off the poor to pay to the rich. We should not endorse wrong figures from either end of the spectrum.

It is GOOD that the public want and endorse a fair, progressive tax system. Lying to them about it will only induce more apathy and KIPpery. Let's not.

PS:

I encourage you to check sources:

The Equality Trust's report [pdf]
and
The Office of National Statistics data

Day 2497: Boring Statistical Point

Friday:


I am getting a bit BORED of the commentary (copyright all newspapers) that "half of all the new jobs created since 1997 have been taken by foreign workers".

It is JUST AS LIKELY that two million new jobs have been created and ENTIRELY taken by British workers… leaving one million LOWER-PAID jobs vacant, which have drawn in workers from Europe to do the jobs that British workers are no longer willing to do.

I am not saying that that HAS happened – it's just no more unlikely than the other EXTREME, the one that everyone is quoting as gospel.

Of course, the Labour didn't create ALL these jobs, either. They just created the public-sector ones by spending money like it was going out of fashion. And this week's latest banking crisis suggests they may have been RIGHT! The Conservatories are just miffed that the Labour is better than they were at creating the CONDITIONS in which other people can create jobs too.


It is the MIX of jobs that is important. If MOST people have moved UP into a better job – British people into better British jobs; European workers move into better-paid jobs in Britain – then surely that is an all round WIN. WE are better off; THEY are better off; the GOVERNMENT gets more tax; the vital jobs still get done… where is the DOWNSIDE?

(Oh yes, it's the new DOG-WHISTLE that the Right have discovered: pressure on housing. Of course, it would also help if they were calling on all those big building corporations that fund the Conservatories so well to build more affordable houses even though that would mean lower profits.)