In the previous posts we explored different areas where statistics are used for scientific purposes, management purposes. operational decisions and intellectual purposes. For example, measuring the cross sections of a Uranium atom (a statistical measurement) allows for the design of a nuclear reactor. But how do you measure what people want both individually and collectively? As a collection of individual people we want and need things, the driving desires that support consumption, purchasing, and demand for business enterprises. As a collection of people we want governance with some degree of unity of effort. In business, demand is projected based on individual wants (consumption) while in governance the what, how and who of what is collectively to be done is chosen (needs). While the separation of wants and needs is a less than perfect analogy, it does offer a way to explore market research and opinion polling.
In market research, companies are focused on what people want to buy. Using the historical data of statistics, they can identify brand preferences for existing products and make decisions regarding production to meet demand. According to https://www.the balance.com/consumer-spending-trends-and-current-statistics-3805916, consumer spending for the second quarter gives a projected 2018 annual spending of $13.9 trillion. Using an age 18-and-over population this equates to about $58,500.00 per “average” American. If you ask “what is an average American?” it is a good question. I do not know other that it’s a mystical being, but not me.
Perhaps “what is consumer spending?” is a better question since it represents 68 percent of the U.S. gross domestic product (GDP), another statistic. Consumer spending has three major categories: durable goods, non-durable goods, and services. Durable goods include things that last for an extended period of time such as automobiles, furniture, computers and so forth. Your cell phone is a durable good, even if you replace it every two years or drop it into a pool of water. Using the $58,500 number mentioned above, the “average” American spends about $7,600.00 per year or 13 percent of his or her after-tax income on durable goods.
Moving to services, the “average” American spends $38,025.00 per year on housing, health care, transportation, recreation, hotels/restaurants ($3,500.00), and so forth. Of these categories, housing and health care are equally split but add up to about $19,900.00 per year. That is almost $10,000.00 per year for health care or about $833.00 per month.
Non-durable goods include food (7 percent), clothing (3 per cent), energy and gasoline (4 percent) and other stuff (8 percent) we consume every day. It represents about 22 percent of our spending or $12,870.00 per year. That is about $1075.00 per month or $248.00 per week. Using just to food portion, the numbers are $342.00 per month or $79.00 per week.
On August 2, 2012, the polling company Gallup Inc., published the results of a poll on how much Americans spend a week on food. The first sentence of the article reads “Americans report spending $151 on food per week on average.” The question asked was “On the average, about how much does your family (emphasis added) spend on food each week?” The mean of the data gathered was $151.00 while the mode was $125.00, either of which could be cited as “average”. The median was not identified.
To gather the data, Gallup polled a total of 1,014 adults aged 18 and older in all 50 states and the District of Columbia. Other data about the poll is included such as confidence level and sampling error. But what do the results really mean? Do they include food acquired with food stamps? How much was spent at restaurants, covered under services in personal consumption data (PCE) published by the government. As an exercise, compare the $79.00 per week data point estimated above to the Gallup number of $151.00.
A citizen of voting age participates in the voting process (or doesn’t) and makes decisions based on information and data presented. In the above example, do you have the time, energy, and knowledge to dig into the data and/or reports to exercise good judgment on, say, food stamp policy? Quoting from Wikipedia, “In psychology, the human mind is considered to be a cognitive miser due to the tendency of people to think and solve problems in simpler and less confident ways rather than in more sophisticated and more effortful ways, regardless of intelligence.”
As “average” citizens we elect officials to deal with these complex problems, even if they are cognitive misers. What metrics do we use to measure their understanding of data, probability and statistics? How important is it to challenge data and its collection process? As an individual, how much knowledge of statistics is needed to make good choices, both individually and collectively? How much statistics education should we be including in the standard, not advanced placement, curricula of high schools? Statistically speaking, data is everywhere. What do we need to know as humanity moves forward?
Till next time….