Tag Archives: Morton Marcus

Average/Median–Or Lying With Statistics

I have previously mentioned–and sometimes quoted–my friend Morton Marcus. Marcus   is an economist; he is retired from Indiana University, where for many years he headed up the Kelly School’s business research center. Morton and I have been friends for a long time, and have just co-authored a book on the women’s movement. (More on that when it’s published.)

Morton also writes a weekly column on economic data  called “Eye on the Pie,” explaining in relatively simple language what various data points tell us about Indiana. That column runs in a number of the remaining small newspapers around the state. In a recent column, he made a point that I think is so important I feel compelled to share it.

Morton fashioned his column as “A note to Gov. Holcomb,” and began by saying that normally, he doesn’t write to the Governor.

But this week is different. A few days ago, you gave your “State of the State” address to the General Assembly. It was a nice talk and very well presented.
You had some good ideas for our state, but, and this is awkward for me to say, you don’t have a staff that keeps you from making the same mistake time-after-time. You’re not the only Governor who makes this mistake. I’ve known them all from Gov. Whitcomb onwards and they all make the same mistake.

And what was that mistake? (I must admit, it’s an error I have often made too.) Let Morton explain:

Almost always the Indiana Economic Development Corporation (IEDC – bless their hearts) tells us the average wage going to be paid by a firm they have arranged (lured, bribed) to open or expand in Indiana.

Most of the media (bless their hearts) regurgitate the press release because they don’t have the time or energy to remember that the average is the mean of a set of numbers. It can be heavily influenced by extreme (high or low) values.

The median, however, tells a different, more meaningful story (if you’ll excuse a little pun there). The median is the wage above which half of the employees will get paid and below which the other half of the workers will be paid.

Let’s say the top gun gets paid $150,000 per year. The #2 gets $75,000, the other eight get $30,000 each. That’s a total payroll of $465,000 for ten employees or an average (mean) annual wage of $46,500. Yet the median pay is $30,000. That’s $16,500 (35%) below the IEDC-advertised average.

From what I hear, Governor, you’re not the type who intentionally misleads or lies to the people of Indiana. But by using the average (mean), rather than the median figure, you’ve been passing on some real whoppers over the years.

If I might have just a bit more of your attention, let me note the average (mean) annual pay for all occupations in Indiana in 2021 was $50,440 (37th in the nation) or $12,110 (32%) above the median Hoosier pay of $38,330 (39th among the 50 states).

With just two years left in your term of office, you said you were going to work harder than ever for all Hoosiers. Maybe you could get IEDC and your staff to give you the most accurate, realistic numbers. Then the people of Indiana would not continue to be misled by excess enthusiasm and just plain ignorance.

When I read this column, it immediately reminded me of a book I read several years ago, debunking several of the claims that were then being made about the “failures” of the nation’s public schools. The authors noted that much of the data being uncritically reported about “averages” was similar to the rather misleading result one would get when averaging a mouse with an elephant.

If you average my income with that of Bill Gates, you’ll come up with a pretty impressive average…

Actually, Morton’s column does inadvertently highlight a failing of the education system: too many Americans (including, I am sorry to say, the one writing this blog) are innumerate–lacking a basic knowledge of mathematics and arithmetic. That innumeracy encourages the use of statistics to mislead. As the saying goes: statistics don’t lie, but liars (and innumerate folks) do use–or misuse– statistics.

The Governor’s error perpetuates the erroneous belief that Indiana is succeeding with an economic development approach that relies almost entirely on keeping the state’s  taxes low–and ignores the fact that those low tax rates prevent the state from spending tax dollars to achieve a quality of life that would be far more likely to attract the businesses and skilled workers we need.

More on that to come….

 

 

What Is Government’s Role?

Americans love to defend liberty–and oppose government actions that they believe intrude on that liberty. (Granted, all too often they are perfectly willing to have government limit other people’s liberties, especially when those other people don’t espouse the same religious beliefs they hold, but that’s a subject for another day…)

We’re just emerging from one of those periodic, heated debates, triggered by “patriots” offended by government’s effort to prevent the spread of a deadly disease. Again, I’m not spending many pixels on the anti-mask, anti-vaccination folks, because (with very few exceptions) they are so clearly wrong–not just on the science, but on the role of government–not to mention remiss in discharging their most basic obligations to other humans. People who don’t believe public health is a public good that governments are bound to protect are beyond the reach of logic and reason.

In many other areas, we get into various shades of gray. There are plenty of issues that raise legitimate questions about the proper role of the state. I’ll admit to qualms, for example, about things like seat belt laws and similar”nanny state” measures, meant to protect individuals from their own heedless or self-destructive behaviors.

I was recently prompted to think about the proper and improper use of government authority when I read a recent “Eye on the Pie” column written by my friend Morton Marcus. Marcus, for those of you unfamiliar with him, is an economist and former director of the Indiana Business Research Center at Indiana University. In this particular column, he defended governmental “intrusion” on the most hallowed of rights: property rights. He argued (I think persuasively) that your house may be private property, but it also has characteristics of a public good.

My house can be seen by anyone driving down my street. Unless I go to great trouble, I can not stop you from seeing my house. I can’t charge you for looking at my house.

But what you see of my house influences your opinion of my block and the price you’d pay to live near me.

Broken windows, leaky roofs, sagging gutters, piles of trash, and abandoned furniture are not inviting signs of habitation. Such a house may be a fire hazard and a danger to its neighbors.

At the same time, if my house has rats or unhealthy conditions, it may pose a health hazard not only to my family, but to yours as well. My children play with your children. I meet you in the grocery. We family may be carriers of disease, my house a public health menace.

Governments have limits on private behavior when public health and safety are at risk. Yet, we’ve seen great resistance to action that infringes on presumed private rights.

We don’t enforce building codes. We allow structural deterioration and abandonment. We don’t insist houses have adequate insulation from the cold of winter and the heat of summer to protect residents from chronic illness..

Our collective neglect is excused because we believe we’re protecting the poor and/or elderly who cannot afford repairs or adequate weatherization.

Yet our housing stock is one of the most vital aspects for the economic development we seek. Our state provides funding to restore abandoned, old movie theaters, but does little to resurrect declining houses.

Our reluctance to infringe on the “rights” of a property owner conflicts with the community’s need to preserve its critical assets.

Morton argues that there are many negative consequences of not treating housing stock as a public good: decay of our central cities, abandonment of our smaller towns,  encouragement of urban sprawl and environmental degradation.  He blames the  “infatuation with the myth of unlimited private property rights.”

Of course, as any lawyer will confirm, there are few if any rights that are “unlimited,” and property rights are no exception.  Laws against nuisance, and minimum upkeep regulations–neither very well enforced, unfortunately–are meant to protect the considerable investments people make in their homes.

Morton’s column raises some thorny issues: does government have an obligation to ensure that people’s homes are humanly habitable? How far does that obligation extend before it becomes an unconstitutional invasion of property rights? What about the rights of homeowners whose properties are adjacent to homes that have been allowed to deteriorate?

If we are talking about property values, it is interesting to note that, in historic areas that are subject to more stringent government regulation, values are not only stable, but tend to be higher.

I’m not entirely sure where I come down on what are often very technical/legal questions of property regulation, but I am sure that these are precisely the sorts of questions our elected officials ought to be debating–rather than worrying about my uterus, Jewish space lasers, or being “replaced.”

 

 

 

 

Maybe The Horse Isn’t Dead Yet…

My friend Morton Marcus–an Indiana columnist who was for many years the Director of   the Indiana Business Research Center–used a recent column to weigh in on the plight of local journalism. As he noted, one of the major causes of the decline of local news outlets has been the displacement of private financing “from independent, local entrepreneurs to large corporate chains that “trimmed” costs.”

“Trimmed ” is a very nice word for the ferocious and destructive cost-cutting that has virtually killed local news– the very product those outlets were selling.

As Morton noted (I got this in an email, so no link–sorry)

Corporations behave like individuals; they seek to avoid the risks of change and the challenges of diversity. Therefore, editors who accept the risk of divergent views are best removed. Reporters who impede corporate strategy are best discharged. Radio and TV stations are bought and stripped of their distinctive local content.
Given lower costs of production, newspaper and magazine offices, TV and radio stations, housing older equipment, with their associated personnel, become unnecessary drags on profits. A conglomerate can morph an enterprise from news and reasoned commentary into a conveyor of entertainment and sensationalism. “Efficiency” of the corporation often out-weighs the quality and nature of the product.

Lest you think Morton’s column was merely another flogging of that “dead horse” along the lines of my post yesterday, you will be happy to learn that he ended with some very good news: the introduction of companion measures in both the House and Senate titled “The Local Journalism Sustainability Act.”

The bill is intended to provide a “pathway to financial viability” for local news produced by newspapers–including all-digital ones–plus television and radio. The mechanism through which this is to be achieved is a combination of three tax credits: a credit aimed at incentivizing subscribers; a credit to provide news outlets an increased ability to hire and retain journalists; and a credit intended to encourage small businesses to advertise in these local news outlets.

The individual credit for subscribers is described as a five-year credit of up to $250 annually, available to individuals who either subscribe to a local newspaper or donate to a nonprofit news organization. It would cover 80% of those costs the first year, and 50% in four subsequent years.

The effort is billed as bipartisan, which–if accurate–should increase its chances of passage.

Will these tax credits work to stem the bleeding? Who knows? I have my concerns about the use of tax incentives, which tend to add to the complexity of America’s tax system, and where “goodies” intended to reward donors can be shielded from the light of day. On the other hand, there are–as I have recently noted–examples of the successful use of such incentives to prompt socially beneficial behaviors.

Perhaps the most significant positive aspect of this effort is that it signals recognition of the problem. If this particular measure doesn’t pass–or fails to stem or reverse the decline of local news–that recognition is a sign that other interventions are likely to be tried.

The importance of that–the importance of agreement over the existence of a problem–is hard to overstate.

There really is no problem we humans cannot address more or less successfully, once there is broad agreement on the existence and nature of a problem.We see this most vividly as we confront climate change and regret the years wasted–the years during which we might have avoided what is now unavoidable–because too many people refused to admit the existence and nature of the threat. We are seeing it in the insistence by right-wingers who refuse to get vaccinated that COVID is a “hoax.”

We can’t solve problems we refuse to see.

What is most heartening about the Local Journalism Sustainability Act is its recognition of the importance of credible, comprehensive local news sources, and the determination to keep that horse alive.