It ain’t what you don’t know that gets you into trouble. It is what you know for sure that just ain’t so.” This is supposedly according to Mark Twain.

Love it or hate it, you simply cannot deny that mathematics (and statistics, for that matter) evokes polarised emotions. Arguably, no subject scars and scares us more than mathe- matics. This is evidenced by the fact that there is nothing quite like statistics, or rather the use thereof, to expose a person’s obvious inability and incompetence. But, this does not seem to deter even the bravest of the brave, or rather, the foolish, from attempting to use statistics to support or enforce their perspective.

With South Africa’s ‘elevation’ to junk status (it does not seem right to me to call it demotion, for, in my view, a demotion is due to one not doing anything rather than doing something), there will be greater use of statistics. But a word of advice: do not simply accept whatever figure you get at face value. The assumption of many people seems to be that statistics are fact. That is not correct, for statistics are collected and compiled by people, fallible people, and, as they say, to err is human. If you assume, then take note that the word ‘assume’ makes an ‘ass’ out of ‘u’ and ‘me’.

Let me cite two examples. First, suppose you earn a salary of R1 000 a month. For whatever reason, you are informed by your boss that, next month, your salary will be reduced by 50%. As a consequence, your new salary will be R500. Inexplicably, the month after your salary reduction, your boss informs you that, the following month, your salary will be readjusted and that it will be increased by 50%. According to your boss, all would be as it was. So, will the readjustment return you to your salary prior to the reduction? Give it some thought. A 50% increase would result in a salary of R750. (Quite simply, 50% of R500 is R250, which is added to your current salary of R500.) The calculations were from different bases: R1 000 and R500.

A second example is the use of percentages, which are seemingly simple to understand and considered by some to be ‘incorruptible’. Actually, percentages could be confusing. It reminds me of the wise of words of my father – you decide if it is said in jest – “if you are not confused, you simply do not have all the facts”. As a word of warning when considering percentages, it reminds me of what I was taught long ago, with clarity, that “if you have your one foot in freezing cold water and the other foot in boiling water, on average, you are comfortable”.
The example is also most opportune since South Africa’s elevation to junk status has raised the fear, and a real possibility, of a repo rate increase and, as a consequence, an interest rate increase is in the offering.

With this in mind, assume that the interest rate increases from 3% to 4%. This represents a one percentage point increase or a 33% increase, since the 1% increase is taken against the baseline of 3 and 1/3 equals 0.33. Now, if the position reverses and the interest rate decreases from 4% to 3%, this will be a decrease of one percentage point. However, this does not repre- sent a decrease of 33%. It, in fact, represents a decrease of 25%, as the one percentage point decrease is taken against the baseline of 4. This might well be too obvious to you, but, in some media reports and research papers, the distinction between percentage points and percentages is not always drawn clearly.

Just in case you believe that you are attentive by nature and that things do not pass you by, you might well be surprised by what follows.

The opening two sentences of this article are a quote attributable to Mark Twain. The same quote and attribution appeared in the feature film The Big Short and in Al Gore’s documentary film, An Inconvenient Truth. These films are internationally renowned and generated significant revenue on release and Twain is famed for his clever quips. So, the quote must surely be true.

Well, according to research done by Daniel Levitin for his book, A Field Guide to Lies and Statistics, the quote is, in fact, attributable to Henry Louis Mencken. Have you heard of him? Honestly? Pinky promise, as the youngsters of today would say? Before you answer, bear in mind that a pinky promise originally indicated that the person who breaks the promise must cut off their pinky finger.

Well, if you feel a bit cheated, let me leave you with a true Mark Twain quote, which in the prevailing South African context, you might well want to ponder: “Whenever you find yourself on the side of the majority, it is time to pause and reflect.”