Misc

Here are 15 Common Data Fallacies to Avoid

Published

2 years ago

April 3, 2018

In today’s tech-driven economy, data is essential for gaining new insights, making decisions, and building products.

In fact, there is so much data out there, that the quantity of it is doubling every two years – and by 2020, there will be 45,000 exabytes of data in existence.

This is an unprecedented figure, and it’s hard to put into perspective. To give you some sense, a single exabyte is equal to 1,000,000,000 GB of data, and five exabytes has been said to be roughly equal to “all of the words ever spoken by mankind”.

Common Fallacies With Data

As you can imagine, digging through all of this data can be quite the challenge.

Data comes in many different forms and not all of them are easy to analyze. As a result, it is tempting to take shortcuts with data, or to try and fit data into our pre-conceived notions of how things ought to be.

Today’s infographic comes to us from Geckoboard and it shows the common mistakes that people make in analyzing data. We’ve reformatted their PDF to fit here.

15 Common Data Fallacies

Here are 15 Common Data Fallacies to Avoid

How do we avoid painting a bullseye around the arrow, so that we can interpret the meaning of data in a logical, consistent, and methodological way?

The key is to understand common mistakes that people make with data, and why these errors skew our interpretations.

Examples of Fallacies

Here are four in-depth examples of fallacies, and why each is considered a faux-pas by data scientists.

Survivorship Bias

When people analyze the qualities it takes to be a good entrepreneur, we typically look at the existing population of successful entrepreneurs for clues. However, by limiting our sample just to this “surviving” group of entrepreneurs, we run the risk of survivorship bias.

There are certainly lessons we can learn from all of the entrepreneurs who have failed – they are just much harder to find. Integrating that data into the story can help complete a much fuller picture.

False Causality

Did you know that there is a 95% correlation between the marriage rate in Kentucky and the amount of people who drown each year from falling out of fishing boats? (See it, an other bizarre correlations here)

Kentucky marriages vs. people who drown

Does this mean that there is some sort of relationship between the two variables?

Finding a high level of correlation can happen simply by chance – but awarding false causality is one of the most amateur statistical mistakes in the book.

The Gambler’s Fallacy

If the roulette wheel turns up black for 26 times in a row, does that mean that it will revert back to red?

It’s easy to say that the odds don’t change, but imagine being in the moment. The Gambler’s Fallacy happens with data analysis as well: just because something happens unusually frequently over a period of time doesn’t mean that nature will “even it out”.

The Cobra Effect

Data can be used to measure progress in achieving business goals, but what if there is incentive to game these goals?

Wells Fargo, in an effort to upsell existing clients, introduced an incentive called “eight is great”. In short, their employees were encouraged to sell eight accounts per customer, which could take the form of credit cards, savings accounts, and other financial services.

In an example of good intentions gone awry, Wells Fargo employees began breaking the rules to meet their targets. Millions of unauthorized credit card and deposit accounts were opened based on this perverse incentive, and the bank was eventually ordered to pay a $142 million settlement.

Related Topics:data mistakes fallacies logical analysis

Up Next

Data Visualization and Cholera: An Unexpected Connection

Don't Miss

Visualizing the Average Commute Time in U.S. States and Cities

Comments

Misc

The Biggest Ammonium Nitrate Explosions since 2000

Ammonium nitrate is dangerous, and every few years, there’s a new explosion that causes widespread damage. These are some of the biggest ones.

Published

2 hours ago

August 6, 2020

Carmen Ang

The Biggest Ammonium Nitrate Explosions since 2000

This week, a massive explosion involving ammonium nitrate rocked the city of Beirut, sending shock waves through the media.

This recent tragedy is devastating, and unfortunately, it’s not the first time this dangerous chemical compound has caused widespread damage.

Today’s graphic outlines the biggest ammonium nitrate explosions over the last 20 years.

A Brief Explanation of Ammonium Nitrate

Before getting into the details, first thing’s first—what is ammonium nitrate?

Ammonium nitrate is formed when ammonia gas is combined with liquid nitric acid. The chemical compound is widely used in agriculture as a fertilizer, but it’s also used in mining explosives. It’s highly combustible when combined with oils and other fuels, but not flammable on its own unless exposed to extremely high temperatures.

It’s actually relatively tough for a fire to cause an ammonium nitrate explosion—but that hasn’t stopped it from happening numerous times in the last few decades.

The Death Toll

Some explosions involving ammonium nitrate have been deadlier than others. Here’s a breakdown of the death toll from each blast:

Year	Location	Country	Deaths
2015	Tianjin	China	165
2004	Ryongchon	North Korea	160
2020	Beirut	Lebanon	157*
2007	Monclova	Mexico	57
2001	Toulouse	France	30
2003	Saint-Romain-en-Jarez	France	26
2004	Mihăileşti	Romania	18
2013	West	United States	15
2004	Barracas	Spain	2
2014	Wyandra	Australia	0

*Note: death count in Beirut as of Aug 6, 2020. Casualty count expected to increase as more information comes available.

One of the deadliest explosions happened in Tianjin, China in 2015. A factory was storing flammable chemicals with ammonium nitrate, and because they weren’t being stored properly, one of the chemicals got too dry and caught fire. The blast killed 165 people and caused $1.1 billion dollars in damage.

In 2001, 14 years before the explosion in Tianjin, a factory exploded in Toulouse, France. The accident killed 30 people and injured 2,500. The power of the blast was equivalent to 20 to 40 tons of TNT, meaning that 40 to 80 tons of ammonium nitrate would have ignited.

In addition to factory explosions, there have been several transportation accidents involving ammonium nitrate. In 2007, a truck in Mexico blew up and killed over 57 people. Filled with explosives, the truck crashed into a pickup, caught fire, and detonated. The blast left a 60-foot long crater in its wake.

The Aftermath

While there have been several ammonium nitrate accidents throughout history, the recent tragedy in Beirut is one of the largest accidental explosions ever recorded, with 157 deaths and 5,000 injuries and counting.

In terms of TNT equivalent, a measure used to gauge the impact of an explosion, it ranks in the top 10 of the largest accidental explosions in history:

Topping the list is yet another ammonium nitrate explosion, this time back in 1947.

Known to history as the Texas City Disaster, the port accident was one of the biggest non-nuclear explosions to occur in history. The explosion killed over 500 people and injured thousands. The impact from the blast was so intense, it created a 15-foot wave that crashed along the docks and caused flooding in the area.

A Resource With Trade-Offs

Despite being dangerous, ammonium nitrate is still a valuable resource. There’s been an increased demand for the chemical from North America’s agricultural sector, and because of this, ammonium nitrate’s market size is expected to see an increase of more than 3% by 2026.

Because of its increasing market size, it’s more important than ever for trade industries to enforce proper safety measures when storing and transporting ammonium nitrate. When safety regulations aren’t followed, accidents can happen—and as we saw this week, the aftermath can be devastating.

Markets

Ranked: The Best and Worst Pension Plans, by Country

As the global population ages, pension reform is more important than ever. Here’s a breakdown of how key countries rank in terms of pension plans.

Published

5 days ago

August 1, 2020

Carmen Ang

Ranked: Countries with the Best and Worst Pension Plans

The global population is aging—by 2050, one in six people will be over the age of 65.

As our aging population nears retirement and gets closer to cashing in their pensions, countries need to ensure their pension systems can withstand the extra strain.

This graphic uses data from the Melbourne Mercer Global Pension Index (MMGPI) to showcase which countries are best equipped to support their older citizens, and which ones aren’t.

The Breakdown

Each country’s pension system has been shaped by its own economic and historical context. This makes it difficult to draw precise comparisons between countries—yet there are certain universal elements that typically lead to adequate and stable support for older citizens.

MMGPI organized these universal elements into three sub-indexes:

Adequacy: The base-level of income, as well as the design of a region’s private pension system.
Sustainability: The state pension age, the level of advanced funding from government, and the level of government debt.
Integrity: Regulations and governance put in place to protect plan members.

These three measures were used to rank the pension system of 37 different countries, representing over 63% of the world’s population.

Here’s how each country ranked:

Country	Overall Value	Adequacy	Sustainability	Integrity
Argentina	39.5	43.1	31.9	44.4
Australia	75.3	70.3	73.5	85.7
Austria	53.9	68.2	22.9	74.4
Brazil	55.9	71.8	27.7	69.8
Canada	69.2	70	61.8	78.2
Chile	68.7	59.4	71.7	79.2
China	48.7	60.5	36.7	46.5
Colombia	58.4	61.4	46	70.8
Denmark	80.3	77.5	82	82.2
Finland	73.6	73.2	60.7	92.3
France	60.2	79.1	41	56.8
Germany	66.1	78.3	44.9	76.4
Hong Kong	61.9	54.5	54.5	86.9
India	45.8	39.9	44.9	56.3
Indonesia	52.2	46.7	47.6	67.5
Ireland	67.3	81.5	44.6	76.3
Italy	52.2	67.4	19	74.5
Japan	48.3	54.6	32.2	60.8
Korea	49.8	47.5	52.6	49.6
Malaysia	60.6	50.5	60.5	76.9
Mexico	45.3	37.5	57.1	41.3
Netherlands	81	78.5	78.3	88.9
New Zealand	70.1	70.9	61.5	80.7
Norway	71.2	71.6	56.8	90.6
Peru	58.5	60	52.4	64.7
Philippines	43.7	39	55.5	34.7
Poland	57.4	62.5	45.3	66
Saudi Arabia	57.1	59.6	50.5	62.2
Singapore	70.8	73.8	59.7	81.4
South Africa	52.6	42.3	46	78.4
Spain	54.7	70	26.9	69.1
Sweden	72.3	67.5	72	80.2
Switzerland	66.7	57.6	65.4	83
Thailand	39.4	35.8	38.8	46.1
Turkey	42.2	42.6	27.1	62.8
UK	64.4	60	55.3	84
U.S.	60.6	58.8	62.9	60.4

The Importance of Sustainability

While all three sub-indexes are important to consider when ranking a country’s pension system, sustainability is particularly significant in the modern context. This is because our global population is increasingly skewing older, meaning an influx of people will soon be cashing in their retirement funds. As a consequence, countries need to ensure their pension systems are sustainable over the long-term.

There are several factors that affect a pension system’s sustainability, including a region’s private pension system, the state pension age, and the balance between workers and retirees.

The country with the most sustainable pension system is Denmark. Not only does the country have a strong basic pension plan—it also has a mandatory occupational scheme, which means employers are obligated by law to provide pension plans for their employees.

Adequacy versus Sustainability

Several countries scored high on adequacy but ranked low when it came to sustainability. Here’s a comparison of both measures, and how each country scored:

Ireland took first place for adequacy, but scored relatively low on the sustainability front at 27th place. This can be partly explained by Ireland’s low level of occupational coverage. The country also has a rapidly aging population, which skews the ratio of workers to retirees. By 2050, Ireland’s worker to retiree ratio is estimated to go from 5:1 to 2:1.

Similar to Ireland, Spain ranks high in adequacy but places extremely low in sustainability.

There are several possible explanations for this—while occupational pension schemes exist, they are optional and participation is low. Spain also has a low fertility rate, which means their worker-to-retiree ratio is expected to decrease.

Steps Towards a Better System

All countries have room for improvement—even the highest-ranking ones. Some general recommendations from MMGPI on how to build a better pension system include:

Increasing the age of retirement: Helps maintain a more balanced worker-to-retiree ratio.
Enforcing mandatory occupational schemes: Makes employers obligated to provide pension plans for their employees.
Limiting access to benefits: Prevents people from dipping into their savings preemptively, thus preserving funds until retirement.
Establishing strong pension assets to fund future liabilities: Ideally, these assets are more than 100% of a country’s GDP.

Pension systems across the globe are under an increasing amount of pressure. It’s time for countries to take a hard look at their pension systems to make sure they’re ready to support their aging population.