Sunday, Dec 09, 2007
Lies and Statistics - Monthly Figures a Crude Measure Apparently
Times: Home Economics
David 'Noshbag' Smith claims that monthly singly monthly figures are a crude measure compared to what I guess (he dosent say) is a monthly moving average. The opposite argument is actually the valid one - Prices ARE falling!
Quote: "How do you get a 0.6% fall for London alongside significant price rises in most of its boroughs?
The answer, it seems, is that the monthly figure for London as a whole is a crude snapshot, while the detailed numbers for the boroughs are based on a more sophisticated rolling statistical calculation.
I would find it hard to argue, on the basis of these numbers, that London house prices suddenly snapped in October...Before wallowing in the gloom, however, it is worth digging a little deeper into the facts behind the headlines.
Logical rubbish!!
10 Comments
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1. David Smith's Sub Prime. . . said...
There is no sub prime and there is no way house prices will crash. Mr Murdoch tells me this. Time I wrote about it.
2. Ttimgg said...
It is possible for the average london price to fall, even though the average price in every borough rises. Yes, you read that right. This sounds impossible, but it is absolutely true, and you can easily prove it using simple GCSE maths.
For example, suppose there are two boroughs, one selling cheap flats for 100,000 the other selling mansions for 10,000,000. One month, we sell 10 flats and 1 mansion. The next month we sell 1 flat and ten mansions. The price for each equivalent house is identical one month to the next, but the AVERAGE price goes ballistic.
Conclusion: average price tells you NOTHING unless you know the distribution. This trick was constantly used on the way up... maybe on the way down the VIs will put a different spin on it!
3. confused76 said...
David Smith is a prize i@iot. To say with the words of Sarah Beeny ... "he borders mental"
4. paul said...
This is David Smith's equivalent of "No, everyone stop saying bad things, just stop, and before you print and broadcast these ideas, stop and analyse it a bit more. Then forget about. Now, stop. Please."
In other words, David Smith has started talking in tongues, not really sure how to react to the simple fact that (surprise surprise) he's wrong again.
5. Hyrax said...
Ttimgg I agree with your argument as posted for a pooled average of the 2 boroughs, but the article seems to me to indicate a single months grand mean for London compared to, what I have assumed, are "rolling" or moving averages of possibly several months for different boroughs. If this were the case the two different parametrics would not lend themselves to direct comparison.
..my issue is David Smith wrote his the article for a sunday paper read by hundreds of thousands without bothering to explain his limits or build the argument with any real statistical rigour,
or few stats at all for that matter. It is still a sloppy article that does not support analysis or verification as it stands.
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7. techieman said...
Ttimgg - strange user name - anyway you are absolutely right. Thats why, whatever else you say about them, the Americans they do deem it pretty important to have had house price statistics for a very long time. They use the "mythical" median house for comparisons for the very reason you detail.
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