Find The Meaning First

Which matters to you more, accuracy or meaning?

The sad reality is that accurate information is not always meaningful and meaningful information is not always accurate. For people who want a quick and easy answer, this poses problems.

For people who are in media jobs, accuracy is important because they can get into trouble if they use data that is not accurate. For the readers though accuracy is not enough. Here is an actual discussion regarding the school quality ranking in Ontario.

Person: School “A’ fell from 197th in the province to 548th in the province in a year. Their score out of 10, was 8.0  and is now 7.5.

Me: That is meaningless. The change is too big and too quick.  You need to dig further. Were all the Grade 3 and Grade 6 pupils last year very clever and this year somewhat dull? Sounds unlikely. Did they move out the good teachers to a weaker school to try to help them?  Even if they did, would it show up in a single year. Is the test different this year and somehow biased against this school?

Person:  It is a standardized test.  It has meaning.

Me: I don’t see how.  Maybe if you took 10 years results and assessed what changed in the environment of the school it might. Did they expand their student body or shrink? Did class sizes change? Did the principal change? Did they build a new subdivision nearby and most of the people who live there have little education?

Person: I don’t know any of those things.

Me: Accuracy does not always add meaning. For example, the average Canadian has 1.99 arms. The fact that the average Canadian is unlike any particular member of the population means that accuracy does not tell us much that is useful about any individual.

Person: I still think the numbers matter.

So it is with most of the things that are reported. Like financial information. Like demographics.

If someone tells you the sales for a store are up $1,000,000 does it mean anything? Maybe. What if they are deep discount sales?  Maybe at cost or less.  Now what?

What if someone tells you there is more oil in the Arctic than in Saudi Arabia? You might ask what is the energy cost to get it out. Net energy reserves might mean something.

Meaning matters and you can spot an amateur by how much they rely on specifics. Context, not the specifics of accurate data matters. You learn by comparing to a standard or to history. Numbers by themselves mean little.

It is like George Carlin doing the sportscast:

“Here are last night’s  baseball scores.  9-3, 2-1, 5-3, 6-4, and in a blowout, 10-1.”

All accurate but with no context.  Always understand the context. It is more work but more fruitful. 

Meaning will follow even if the data is not 100% accurate.

Don Shaughnessy arranges life insurance for people who understand the value of a life insured estate. He can be reached at The Protectors Group, a large insurance, employee benefits, and investment agency in Peterborough, Ontario.  In previous careers, he has been a partner in a large international public accounting firm, CEO of a software start-up, a partner in an energy management system importer, and briefly in the restaurant business.

Please be in touch if I can help you.  don@moneyfyi.com  866-285-7772

This entry was posted in Insight to Business, Personal Finance, What The Martian Saw and tagged , , , . Bookmark the permalink.

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