Tuesday, February 10, 2009

For data to be meaningful, it must be normalized

The NRO's Corner posts two charts that tell a million words (accounting for inflation). The non-normalized data chart is on the top and normalized data chart is below (click on charts for larger image):

The green line, chicken little, the sky is falling on the non-normalized chart is supposed to depict the rate of current job loss in the US economy. The more sane logical sky blue line on the normalized chart places the data into context.

A more quotidian example in basic mathematics, for people who suffered with lackadaisical substitute teachers in math class:

If a person missed 2 questions on a 3 question quiz, s/he fails miserably with a 33%. However, if a student missed 2 questions on a 100 question test, s/he passes readily with a 98%.

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