Gary Smith - Standard Deviations: Flawed Assumptions, Tortured Data, and Other Ways to Lie with Statistics

This edition first published in hardcover in the United States and the United Kingdom in 2014 by Overlook Duckworth, Peter Mayer Publishers, Inc.

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Copyright 2014 by Gary Smith

All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopy, recording, or any information storage and retrieval system now known or to be invented, without permission in writing from the publisher, except by a reviewer who wishes to quote brief passages in connection with a review written for inclusion in a magazine, newspaper, or broadcast.

ISBN: 978-1-4683-1068-9

Gary Smiths Standard Deviations is both a statement of principles for doing statistical inference correctly and a practical guide for interpreting the (supposedly) data-based inferences other people have drawn. Cleverly written and engaging to read, the book is full of concrete examples that make clear not just what Smith is saying but why it matters. Readers will discover that lots of what they thought theyd learned is wrong, and theyll understand why.

B ENJAMIN M. F RIEDMAN

William Joseph Maier Professor
of Political Economy, Harvard University

Standard Deviations shows in compelling fashion why humans are so susceptible to the misuse of statistical evidence and why this matters. I know of no other book that explains important concepts such as selection bias in such an entertaining and memorable manner.

R ICHARD J. M URNANE

Thompson Professor of Education and Society,
Harvard Graduate School of Education

We all learn in school that there are three kinds of lies: lies, damn lies, and statistics. Gary Smiths new book imparts true substance to this point by setting forth myriad examples of how and why statistics and data-crunching at large are susceptible to corruption. The great risk today is that the young will forget that deductive logic is vastly more powerful than inductive logic.

H ORACE W OODY B ROCK

President, Strategic Economic Decisions, Inc.

Statistical reasoning is the most used and abused form of rhetoric in the field of finance. Standard Deviations is an approachable and effective means to arm oneself against the onslaught statistical hyperbole in our modern age. Professor Smith has done us all a tremendous service.

B RYAN W HITE

Managing Director, BlackRock, Inc.

Its entertaining, its gossipy, its insightfuland its destined to be a classic. Based on a lifetime of experience unraveling the methodical blunders that remain all too frequent, this book communicates Gary Smiths wisdom about how not to do a data analysis. Smiths engaging rendering of countless painful mistakes will help readers avoid the pitfalls far better than merely mastering theorems.

E DWARD E. L EAMER

Distinguished Professor and Chauncey J. Medberry
Chair in Management, UCLA

Standard Deviations will teach you how not to be deceived by lies masquerading as statistics. Written in an entertaining style with contemporary examples, this book should appeal to everyone, whether interested in marriages or mortgages, the wealth of your family, or the health of the economy. This should be required reading for everyone living in this age of (too much?) information.

A RTHUR B ENJAMIN

Professor of Mathematics, Harvey Mudd College
and author of Secrets of Mental Math

One of those rare books that make people better for having read it.

J AY C ORDES

Senior Manager, RookMedia.net

Most of the authoritative, sciencey-sounding claims were fed by the media are polluted by distortions, biases, and plain old errors. In Standard Deviations, Gary Smith sets the record straight.

D AVID H. F REEDMAN

Author of Wrong: Why Experts Keep Failing Usand
How to Know When Not to Trust Them

DID YOU KNOW that building a quarry in your backyard can increase your property value? Or that Americas unemployment rate is actually zero? Or that drinking a full pot of coffee every morning adds years to your life, but drinking two cups a day increases the risk of cancer?

If you believe the above, then Professor Gary Smith has a World Cuppredicting octopus hed like to show you. The sad truth is that facts like these are routinely presented with a straight face by credentialed academics and backed up with reams of raw data. In Standard Deviations, Smith skillfully unpacks the various ways we are duped by data every day. He deftly demonstrates how a straightforward set of findings can be teased and manipulated to reflect whatever the researcher wants to see.

Lying with statistics is a time-honored con, and in this age of Big Data even the most accredited findings can be suspect. Blending the keen statistical eye of Nate Silver with the probing insights of Daniel Kahneman and Dan Ariely, Smith demystifies the math behind the dismal science, making it easy to spot flaws all around and find the truth hidden in plain sight.

Chapter 1: Patterns, Patterns, Patterns

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Daily Mail Foreign Services (2010). Hes No Sucker: Paul the Oracle Octopus is Right For the Seventh Time After Picking Germany to Beat Uruguay to Third Place, Mail Online, July 10, 2010.

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