## Sunday, April 20, 2008

### When is 325,000 Greater Than 325,425?

According to a recent Cornell business school report, the answer is, when it involves money. The statistical study actually involved housing prices (rather apropos, given the meltdown in the mortgage market), so that a house priced with a "precise" number like $325,425 (i.e., more significant digits) was perceived to be cheaper than one priced at the rounded down value of$325,000.

Interestingly enough, prices like $299,999 (akin to the usual sales ploy one sees in department stores and on TV) were deliberately excluded from the Cornell study because numbers ending in all 9's, although a precise number (by their definition), is considered too close to the rounded value ($300,000) to give a statistically reliable distinction.

One has to wonder, what are the implications for the way capacity planning reports are perceived? We'll discuss that point next week as part of the section on significant digits in the Guerrilla Boot Camp class.

Even if you think such statistical reports might be a bit suspect, you've gotta love their opening rubric from Lewis Carroll:

I'm counting the Pigs in the field!' (Bruno, looking out the window)
How many are there?' I enquired.
About a thousand and four,' said Bruno.
You mean "about a thousand",' Sylvie corrected him.
There's no good saying "and four": you can't be sure about the four!'

And you're as wrong as ever!' Bruno exclaimed triumphantly.
`It's just the four I can be sure about;
'cause they're here, grubbling under the window! It's the thousand I isn't pruffickly sure about!'