It seems like I’m not done criticising poor reporting from South African news sites yet. We had City Press irresponsibly promoting psychics, News24 writing a headline that got almost everything wrong and, now, Business Insider fails to understand numbers and get mislead by a poorly-designed graph. I would’ve thought a business-focussed publication would understand numbers and graphs but, not for the first time, I have been disappointed.
The graph below was produced by Stats SA and reproduced in a Business Insider article about the Rand turning 60. It shows how the price of various goods have increased since 1961. However, the graph is confusing and could easily mislead people. Take a look now and see if you can spot the problem. [Edit (16/02/2021): The BI article has been updated and both the graph and statement have been removed.]
The misleading part of this graph is that it is talking about price increases, so one would, not unreasonably, expect the gap between the original and current price to reflect the size of the increase. It does… sort of. It gives the increase in absolute Rands. Ground coffee has increased by R146,51 and cigarettes have increased by R42,95. But, because the two items had different starting prices, the actual increase in price says nothing about the relative difference in price and you can not use the actual difference to make a meaningful comparison.
Imagine if person A has R10 and person B has R5. Then it is right to say that A has twice as much money as B and it is also correct to say that A has R5 more than B. Now what happens if we double their money? A will have R20 and B will have R10. Now, although A still has twice as much as B, the actual difference between them is R10. If we double their money again, A will have R40 and B will have R20. Still the same relative amounts but now a R20 difference. Even if A and B increase their money at the same rate, the actual difference will grow larger and larger because of their different starting amounts.
If house prices increased by R100, you wouldn’t even notice; if the price of bread increased by R100 it would be a disaster. Business Insider South Africa fails to make the distinction between the actual increase in price and the relative increase in price when they, wrongly, say that:
A Statistics SA analysis shows that coffee and chicken prices exploded compared to 1961 levels, but beer and white bread price increases were relatively more muted
Let’s compare the 1961 prices of the items in the graph with their 2020 prices by seeing how much the price has increased relative to its original value.
|Item||1961 Price (R)||2020 Price (R)||Relative Increase (X)|
This tells a very different story! The price of ground coffee has increased to 169X its 1961 price. That’s a lot, but it’s the same relative increase as white bread. And the chicken, which Business Insider said has exploded in price, is actually just 83X its 1961 price; the lowest relative increase of all! If they wanted to talk about prices exploding then cigarettes, which are now 227X their 1961 price, have increased the most.
The Stats SA graph is not wrong but it can be misleading, and Business Insider was misled. Despite what they claim, the price of chicken has increased the least of the items shown. While the actual difference between the 1961 price and the 2020 price is large, this is because the original price of chicken was one of the highest. Hopefully, this will remind everyone to pause and look more closely when information is presented.