Shakira and statistics

Shakira and statistics

This is most definitely the season of write-downs. First we had bulge-bracket global banks a bit sheepishly admitting that the subprime loans on their books were far less valuable than initially believed.

But now the banks have varied company. There have been reports that the World Bank now believes that the size of China’s economy, on the basis on purchasing power parity, is 40% lower than expected. The actual announcement is expected only later in the year.

A senior United Nations official says the global agency has been overestimating the size and progress of the feared AIDS epidemic. The new estimate for annual HIV infections is now 2.5 million, a cut of—coincidentally— 40% from last year’s estimate.

There are lessons in these three unconnected events. We are bombarded each day with numbers, and we lap them up as citizens and investors. But beware.

The moral: hips don’t lie, but numbers sometimes do.