10 November 2011

📉Graphical Representation: Index Numbers (Just the Quotes)

"To a very striking degree our culture has become a Statistical culture. Even a person who may never have heard of an index number is affected [...] by [...] of those index numbers which describe the cost of living. It is impossible to understand Psychology, Sociology, Economics, Finance or a Physical Science without some general idea of the meaning of an average, of variation, of concomitance, of sampling, of how to interpret charts and tables." (Carrol D Wright, 1887)

"In any chart where index numbers are used the greatest care should be taken to select as unity a set of conditions thoroughly typical and representative. It is frequently best to take as unity the average of a series of years immediately preceding the years for which a study is to be made. The series of years averaged to represent unity should, if possible, be so selected that they will include one full cycle or wave of fluctuation. If one complete cycle involves too many years, the years selected as unity should be taken in equal number on either side of a year which represents most nearly the normal condition." (Willard C Brinton, "Graphic Methods for Presenting Facts", 1919)

"The use of two or more amount scales for comparisons of series in which the units are unlike and, therefore, not comparable [...] generally results in an ineffective and confusing presentation which is difficult to understand and to interpret. Comparisons of this nature can be much more clearly shown by reducing the components to a comparable basis as percentages or index numbers." (Rufus R Lutz, "Graphic Presentation Simplified", 1949)

"The economists, of course, have great fun - and show remarkable skill - in inventing more refined index numbers. Sometimes they use geometric averages instead of arithmetic averages" (the advantage here being that the geometric average is less upset by extreme oscillations in individual items), sometimes they use the harmonic average. But these are all refinements of the basic idea of the index number [...]" (Michael J Moroney, "Facts from Figures", 1951)

"Index numbers are today one of the most widely used statistical devices…They are used to take the pulse of the economy and they have come to be used as indicators of inflationary or deflationary tendencies." (George Simpson & Fritz Kafka, "Basic Statistics", 1952)

"The great trouble with all business data upon which the statisticians and economists base their forecasts is that they are ancient history before they ever become available. They pertain to conditions which existed some weeks or months previous. The figures for what is going on at the moment in all lines of business are never available. A business index, while of great interest and value, is always historical and never predictive." (Walter E Weld, "How to Chart; Facts from Figures with Graphs", 1959)

"The fact that index numbers attempt to measure changes of items gives rise to some knotty problems. The dispersion of a group of products increases with the passage of time, principally because some items have a long-run tendency to fall while others tend to rise. Basic changes in the demand is fundamentally responsible. The averages become less and less representative as the distance from the period increases." (Anna C Rogers, "Graphic Charts Handbook", 1961)

"A statistical index has all the potential pitfalls of any descriptive statistic - plus the distortions introduced by combining multiple indicators into a single number. By definition, any index is going to be sensitive to how it is constructed; it will be affected both by what measures go into the index and by how each of those measures is weighted." (Charles Wheelan, "Naked Statistics: Stripping the Dread from the Data", 2012)

"Once these different measures of performance are consolidated into a single number, that statistic can be used to make comparisons […] The advantage of any index is that it consolidates lots of complex information into a single number. We can then rank things that otherwise defy simple comparison […] Any index is highly sensitive to the descriptive statistics that are cobbled together to build it, and to the weight given to each of those components. As a result, indices range from useful but imperfect tools to complete charades." (Charles Wheelan, "Naked Statistics: Stripping the Dread from the Data", 2012)

"When using indexes in a data set, using an average aggregation is appropriate as long as you only use it at the individual region, month, and visitor type level (i.e., the lowest granularity of the data). You cannot use an average of the average to represent the total."  (Andy Kriebel & Eva Murray, "#MakeoverMonday: Improving How We Visualize and Analyze Data, One Chart at a Time", 2018)

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