If there is one thing which drives me nuts about business news, it is how often they use percentages as if they were quantities. For example, a recent story on CNN.com talked about how house prices in a particular city had gone up approximately 200% to a peak price, but had dropped significantly and were projected to drop a total of 69%. Now, as a math person, I know that means the price after the drop will be lower than the price when the surge started, but is that really obvious to the average reader. The impression left is that houses are worth 131% more than they were originally, and there is virtually no effort made to correct that assumption.
In case this isn't obvious to you, a $100,000 house in 2000 that went up by 200% would be a $300,000 house in 2007, and after a 66.6% drop, would be $100,000 house again, since the percentage is applied to the "current price", which keeps changing. That is why percentages are confusing.
The same sort of thing happens in the stock market. There is much news made about how the U.S. stock market has risen 20% in the past few weeks, but little is said about the fact that the smaller percentage drop in the few weeks before that was the same number of points.
Now, I feel a bit cynical and elitist complaining about news that assumes educated readers, but we would not be in the economic mess we are in today if more people were financially and mathematically educated. I think the business media should make a more concerted effort to be sure their news is understood by their readers.
Copyright © 2009 Genii Software Ltd.
Tags: Business Math Education