Aims of the Blog

O what a complex world we live in, made worse by those who give opinions and spurious analysis. We are pulled this way and that by statements with less substance than the statement “Liverpool is the greatest football team in the world.”

So how should, opinionated and, (occasionally) manic beancounter  try to clear the waters?

After over 20 years of working as a Management Accountant in industry, I have developed a number of techniques for analyzing data. These I hope to further develop in the course of analyzing various issues that take my interest. There are a few pointers they I will try to develop.

 

1. When examining a complex issue, it is worth looking at the totality, and in assessing the parts in relation to that totality. When looking at an overspend on overheads, emphasizing that someone ordered ten years supply of paper clips might sound a reasonable explanation. However, the cost of £50 is small in relation to the annual profit share payout of £100,000. Ordering 100 boxes of paperclips instead of 1 appears a massive and memorable mistake, but is insignificant. As I hope to bring out, many debates on issues fail to gain this perspective, or take the approach of the tabloid press.  For example, the “Make Poverty History” campaign of 2005 in its objectives failed to first appreciate the magnitude of the problem. Even if all its proposals had been met in full (Extra aid, Trade Justice etc.) the plight of the poorest would not have been reduced. More on this at a later date.

 

2. It is worth cross-checking your findings. In accountancy, when analyzing historic figures, this is making sure that they balance with the data set they were extracted from. When generating a forecast the end cross-check is to make sure that the assumptions generate a coherent picture. That an increase in sale to a customers of 20% in a quarter may not continue for the next two years at that rate, particularly if they have told you they are increasing stocks. At a later date, I hope to explore this issue with respect of conspiracy theories.

 

3. The reason for a variance, or a novel event, is not necessarily the most obvious one. It is only by analysing the data that the true variance becomes apparent. For instance in manufacturing a lot of overtime is paid. Overtime costs may rise. The obvious reason is due to production volumes increasing. However, analysis of the figures my reveal a 20% rise in hours worked for a 5% production rise. The rest is accounted for by production issues. The relevant managers may not see this reason, as they are too close to the figures.

 

4. Allied to the above a bias of experience. The most important issues often put forward are the one’s the person on the ground is dealing with. The Pareto rule is relevant here, that we spend 80% of our time dealing with 20% of the issues. Pareto is usually ignored. Alternatively, the reason put forward is the last one a person dealt with.

 

5. Further, there “the bias of responsibilities“, or more generally “the bias of position”  The production manager will blame to adverse production costs to raw material price increases, or poor quality of that material, unless there is data to show otherwise. The sales manager will claim the credit for a major order, whether they have worked hard for it, or a customer found the business on Google and placed the order. So it is with politicians, only without the analysis.

 

 

So let us apply this to the statement “Liverpool is the greatest football team in the world.”

We could point to a survey that says “Of 1000 people questioned, 98% agreed with the above statement”. You later find out it was conducted by members of a Liverpool Fanzine, in Liverpool City centre, 3 hours before a major Liverpool home game. How would you independently check? Clearly, a survey conducted any other city, would reveal much lower agreement, so you would have to look for the data. A Liverpool supporter would give prominence to the number of times they have won the European Cup, or hark back to the 1970s and 1980s, when they dominated English football. For them the statement is really “Liverpool is the greatest football team in European competitions Iinthe last 40 years and the England  in the 1970s and 1980s.” A more uncritical analysis would take other aspects and time frames. 

1. Looking at the totality, and in assessing the parts in relation to that totality, one would go back to the start of the leagues and see if Liverpool averaged the highest position. Also at the cups won in the English Leagues.  Then one would look at the position of English leagues in relation to other countries, and the relative success of Liverpool. One might give a weighting to recent years over distant years.
2. Cross-checking your findings. The stats from a Liverpool fan should be crossed-checked against available histories.
3. The reason for a variance, or a novel event, is not necessarily the most obvious one. Liverpool’s wins in European competitions in the 1970s may have been due to putting more resources into the competition than other major European teams, or by the manager studying tactics of potential opponents, rather than having the best squad of players/
4. A bias of experience. To be a supporter is to be openly biased. The good days are due to the brilliant team, the skilled manager and the cheering of the crowd. The humiliating defeats are due to the weather, the poor decisions of the referee, or the foul play of the opposition. In the political realm the same is true.
5. The bias of position. Post match interviews of the managers are a good example of this.

 

Finally, as a Mancunian I will be concentrating on the UK, often with reference to the local situation in Manchester.  I will let my particular biases become clear later. It does not include support for the two major teams in Manchester – Manchester City and Manchester City Reserves.