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Lies, Damn Lies, and Statistics

At a presentation that I recently attended, a bright, successful hedge fund manager claimed there are two types of economies in the world today -- emerging markets (like China and India) and submerging markets (like the United States).  To bolster his claim, the manager noted how China and India are graduating significantly more engineers each year than the good, old USA.  This statement may be technically true, but it's terribly misleading.



It was widely reported that the United States had 70,000 engineering graduates in 2004 as compared to 600,000 and 350,000 for China and India, respectively.  This doesn't seem to bode well for the future of the home team.  But a subsequent study conducted by Duke University called into question the conclusions that should be drawn from these numbers.

For one thing, the per capita engineering graduation rate for the U.S. (750 per million) exceeds that of China (500 per million) and India (200 per million).

More importantly, the term "engineer" does not necessarily mean the same thing in all three countries.  The U.S. figure consists of graduates of a four year college.  The Chinese and Indian numbers include a large percentage of what would be called "technicians" at best -- including graduates of two- and three-year programs as well as vocational schools.

In a separate study, McKinsey Global Institute issued a report that questioned the competency of the vast majority of the so-called engineers in China as compared to their American counter-parts.  It appears that China is cranking out "engineers" in factory-like fashion.

The headline above refers to the 19th century British Prime Minister Benjamin Disraeli's description of three types of lies.  His observation remains true today.

Words of Wisdom

These are my principles.  If you don't like them, I have others.
-- Groucho Marx