Your data lies to you

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Data tells lies all the time.

You can make it say whatever you want.

Here’s an example I saw from LinkedIn this week.

Wow! That chart looks terrible!

Home prices have increased 462% but income has only increased 215%.

Sure looks like millennials have it bad. How are we millennials supposed to survive in these terrible economic times? Our parents had it so good. They can’t understand the hardship we are going through right now.

What a great narrative for the news headlines to grab.

The problem? This chart is lying to you.

Lying by omission. They left out a crucial piece of information.

Mortgage interest rates.

Average interest rates in 1985 = 13%

Average interest rates in 2022 = 3.5%

Which dramatically changes the narrative. Here’s what home prices as a monthly payment look like

1985: $83,200 house at 13% interest = $920 monthly payment

2022: $468,000 house at 3.5% interest = $2,102 monthly payment

So while housing prices increased by 462%, a monthly mortgage only increased by 128%. Still sound like a big increase? Well, income increased by 215% during that same time.

In 1985 the median American family paid 46% of their income toward their mortgage and interest.

In 2022 the median American family paid 33% of their income toward their mortgage and interest.

Thats right. By this measurement, millennials in 2022 had access to cheaper housing by percentage of income than their boomer parents.

The narrative completely flips

Data is not objective. It is very bias based on the story you want to tell.

To be “data-driven” means not only that you know how to make decisions with data, but you know how to determine when data is lying to you.

I’m here,

Sawyer