The problem with the mean

The problem with the mean

Here is an outlier for you.

Jeff Bezos 

When it comes to income, Mr Bezos has few peers. Only a handful of individuals earn more in a second than most regular folks do in a month.

According to the Australian Bureau of Statistics, who conduct regular and rigorous surveys, Australians average weekly ordinary time earnings for full-time adults (seasonally adjusted) was $1,737 for May 2021 across a workforce of 13 million people.

What would happen to the average weekly income of Australians if Mr Bezos went down under and we added his weekly ‘wage’ to the calculation of the mean?

The average weekly wage would grow by $116 or roughly 7%

A hundred bucks a week more from one outlier.

There is no rational reason for an individual to have such obscene wealth, and we might get sidetracked by the savage inequality. Still, the example shows what happens to averages when there are outliers.

They get distorted.

Add Mr Bezos to the Australian workforce, and average income goes up materially even though workers would not see a cent of it.

Suppose Mr Musk and Mr Gates also came down under.

The average weekly wage goes up by over 15%, thanks to three outliers in 13 million. 

Try it this way

Suppose we select 100 males at random from a population of college students and measure their height. In that case, we could assume that the average represented reasonably well the height of a typical male in college.

But suppose this was a college with a strong basketball program, and the sample included three of the tallest members of the team. We have outliers again.

The challenge is to know when an outlier is possible — there is a basketball program — and so is part of the population that will now be, on average, taller as a result and when an outlier is improbable. Unlikely outliers add skew to the data and whilst still statistically sound, can make for shaky conclusions. 

The statistical rationale is that very few variables in real life are distributed normally. They are skewed, typically by a few large outliers, so that the mean is larger than the modal (most common) value and the median value (the middle value in a sequence of numbers).

Medians and modes present one of the solutions to the problem. The average is only one measure of central tendency; the middle of the distribution. It is helpful to use the others, especially the median (the midpoint of a frequency distribution of observed values or quantities, such that there is an equal probability of falling above or below it) or the mode (the most frequent value in a frequency distribution).

There is a simpler solution

Statisticians, politicians, and the media are fond of describing the average with a mean. They use them all the time to convey information.

The mean is where you add up all the values and then divide by the number of values.

But be careful. There are outliers everywhere, and they tend to make means larger.

The simple solution is to know about outliers and be cautious of means, primarily when the reporter benefits from it being large.

Hero image from photo by Charles Deluvio on Unsplash

Advice from a celibate priest

Advice from a celibate priest

Life is a contradiction. 

How is it even possible that organic life can defy all the laws of entropy and exist for more than five minutes? More than that, organisms last long enough to complete their life’s mission — almost all of them procreate.

More making is the purpose, and so all organisms make more. 

Microbes, to mice and men, getting ready and achieving reproduction in its myriad forms is what happens every minute of every day. All the actions of sentient beings are geared to more making.

This imperative is fundamental to our understanding of how evolution works. Replication with a bit of error and selection for the helpful errors is how life persists and generates diversity. The driver is reproduction.

Humans are not immune. We have powerful reproductive urges that manifest as an often overpowering sense of family, helicopter parenting, and more websites with sexual content than any other category. 

History tells us that brothels and breweries are the first essential services in any new town.

Anyone with the self-discipline and conviction to resist the innate urge to reproduce has a powerful tool over others. No wonder the church has used clerical celibacy. The church sees devotion by a man who chooses not to have sex “a special gift of God by which sacred ministers can more easily remain close to Christ with an undivided heart, and can dedicate themselves more freely to the service of God and their neighbour.

Service to others but not to their pets.

Here is what Guardian columnist Arwa Mahdawi had to say about Pope Francis telling everyone that choosing to have pets instead of kids is “selfish”… 

Ah yes, choosing not to bring a child into an overpopulated world that is careening towards climate catastrophe is the height of selfishness! I know the pope lives in a palace and probably isn’t too familiar with the current costs of childcare but he might want to look into just how expensive having a kid is these days.

Arwa Mahawi

The Pope might be celibate but his parishioners must prioritise kids over their fur babies. They must follow the primary biological directive to reproduce.

There are dozens of posts to write on this deep and meaningful hypocrisy, but the obvious one is this…

Humanity can only survive the next 100 years if we repress our reproductive urges by choice or design because the planet is finite. It cannot sustain post-industrial revolution rates of human population growth and resource demand for another century. 

There has to be a demographic transition and a shift to sustainable resource use or else we fall from our perceived pinnacle and struggle to persist.

No matter how important kids are to a celibate white man, fewer children are necessary, and if that means fur babies, so be it. 

Hero image from photo by sarandy westfall on Unsplash

What happens in a leadership vacuum?

What happens in a leadership vacuum?

We are all finding out what happens in a leadership vacuum right now. Most everywhere there is a lack of leadership in politics, a lack of leadership in society, and, where I come from at least, a lack of leadership in the public service.

What happens in this vacuum?

Fear, trepidation and ultimately chaos.

Here are some examples of why we are in the grip of this awful trio

Would you like a burger? 

Back in the day, this was a simple enough question. Answer yes and a grilled beef pattie inside a sweet bun with some lettuce, tomato and pickle would arrive in greaseproof paper. 

Only now everyone’s opinion on burgers must be heard.

I expect a veggie burger others will say I’m sorry I don’t like beef burgers but I do like a chicken burger. Others will want chilli sauce with that, another will say please hold the pickles. After much debate and discussion, it will be clear that there’s no standard burger that would satisfy everybody. 

OK, some more inclusivity but the question then becomes who chooses what the priority for the burger should be? In the absence of any leadership, there is no one to make a call and all opinions cut have equal priority. This creates a product challenge for the burger outlet.

When everyone has an opinion it’s hard to prioritise. A democratic consensus is an ideal solution but not one that can be used for most operational matters even at the government level. For example, should we buy submarines from the French or the Americans?  

All views are canvassed and it doesn’t matter whether you are a senior person in the organisation or someone who’s only just joined as an intern, everyone gets to give their opinion. 

Great inclusivity right? After all, true leaders are also great listeners. 

Well perhaps, but canvassing opinion is a tool to gauge the most common beliefs and values. It helps leaders make considered decisions but does not make the decisions for them.

Excessive asking makes everyone keen to give their opinion on all matters. Many get cranky if they’re not given the opportunity to say what they think. The plumber gets an opinion on health measures in a pandemic and the cardiologist on the price of cheese. 

Remember that opinion need not be based on evidence or facts, it is a view or judgement formed about something, not necessarily based on fact or knowledge.

But once everyone gives voice to their opinion, priorities hide under a bush.

Would you like extra value with that? 

It is a delight of the human condition that we each have a different set of values. It gives us diversity and plenty to talk about over the burger.

Values within each value set are held more strongly or weakly depending on culture, experience and nurture. As more people are added to the conversation, values become nuanced and the value propositions multiply.

A critical function of leadership is to help balance these values and to land on the optimal value set that most can agree on or be persuaded to follow.

In a leadership vacuum, the values space is filled by indecision. 

Organisations are held hostage by the committee and the plethora of values and have no idea which burger to make or what trimmings to add.

Novelty burgers

In the leadership vacuum where everyone has an opinion and all values are in the mix egos flourish. 

If my value or opinion is unusual or a bit out there, no worries. I can follow it anyway and make it happen through force of personality with a side of arrogance. There is no reason to knuckle down and collaborate, I can just go and do my thing on my own and build a burger with a tofu pattie and a slice of pawpaw instead of beetroot. 

This lone ranger approach is great for creatives and artists of all kinds. It works for entrepreneurs and futurists too but is not so helpful if the task is to make billions of burgers at a realistic price or to choose the most cost-effective marine deterrent that is in the best interest of the country.

The novelty burger has a niche market but sales always stall.

Deconstructed burger

A profusion of Lone Rangers, or whatever the collective noun might be, generates so many burger options that the whole meaning of the burger is deconstructed out of existence.

Nobody knows what the national dish is anymore and togetherness suffers. 

It is not long before any collective purpose is lost and society drifts. This is ideal for those who never believed in the burger in the first place and knew everyone should eat tofu because they did.

Leaders provide direction. It is a core purpose of the breed and they can win hearts and minds because we crave the good vibes that come from collaboration on a shared direction — the contradiction that makes us Lone Rangers in the first place. 

In the absence of leaders who can articulate a shared direction, we invent them for ourselves.

Tandoori chicken instead

Perhaps the most important consequence of a leadership vacuum is that we lose respect for leadership. Burgers are forgotten as we find alternatives in the tandoori oven.

A glance at politics in the mature economies shows most leaders on the nose to the point of ridicule and disbelief. And it’s not just Boris obviously. Recall that respect is ‘a feeling of deep admiration for someone or something elicited by their abilities, qualities, or achievements’. In other words, it is earned. 

Vacuous leadership not only fails to garner respect from lack of ability, it also erodes the repository of respect built up over generations by previous incumbents. The likes of Lincoln, Churchill, Ghandi, and Mandela didn’t build a mountain of leadership respect for jokers like Trump to trash it in one term of office. 

They did the right thing for their people in their time. 

A flogged analogy 

Burgers will always be on the menu somewhere — they are delicious, easy to eat, cheap to make and go great with sides.

We will get leaders back soon enough.

The risk is that in a rush to calm our fears and avoid chaos we allow leadership that makes us all eat the same burger, every day for the rest of our lives.  

Hero image from photo by Ilya Mashkov on Unsplash

Where will people live in the future?

Where will people live in the future?

Kate Raworth wrote her influential book, Doughnut Economics that links the reality of planetary boundaries with social boundaries in 2017, a couple of years before the pandemic.

Here is one of the many quotable quotes in her book.  

In other words, the vast cities and conurbations of today will not accommodate all the people who want to live in urban areas by 2030.

There are two reasons for this.

The first is that the global population continues to rise. By 2030 there will be 8.55 billion people on earth, one billion more than in 2017.

The second is that more and more people want to live in urban areas drawn by the prospects for betterment in the economic centres and pushed by the increasingly harsh realities of a rural existence — only those with a stash of cash want to escape to the country.

When I was born in 1961 two thirds of people were living on the land. That proportion fell to half in 2006 and by 2017 around 45% of people lived in rural areas. 

As the population has increased overall, so more people are living in town and the rural population has stabilised.

Project the current trends to 2030 and 60% of the 8.55 billion people are urban. 

This means the towns and cities around the world must accommodate another 650 million people in a decade.

Just let that number — 650 million —  sit for a moment.

Then consider that the largest city in the world today is Tokyo with 37.4 million souls.

Infrastructure equivalent to 20 Tokyo’s must be built to house these new arrivals.

Naturally, many economists see this as a huge opportunity as does your local carpenter, roofer and electrician. There is work to be done. 

The challenge of course is to house, clothe, and feed all these urbanites without rampaging through materials, burning dirty energy, and creating an external mess that nobody wants to clean up.

Live in the coutryside

One option is to make rural life more attractive.

Invest in rural infrastructure and services to keep people on the land by making country life just as good as the cities — rural folk would argue it already is. This would reduce the proportion of urban dwellers that would continue to rise but at a slower rate, maybe one that the urban infrastructure could handle.

The countryside in most countries already has a lot going for it. 

Clean air, wide-open spaces, low-cost housing, no traffic and no crowds. It has the outdoors.

What is missing is a way to make a living and to live with the security of essential services, entertainment and social engagement that cities offer.

Enter the distributed economy, working from home, diversified food production, and even a universal basic income.

COVID measures were a great test of such structural adjustments. It proved that society could adopt remote work, learning and even health readily and, if necessary, in a hurry.  

Similar options could easily accommodate people in the countryside. 

There are commercial opportunities too because making the country attractive to a wider audience is a lot more than teaching people how to be farmers. 

All it takes is vision and the new urban in the country will have a delightful view. 

Hero image by Illiya Vjestica on Unsplash 

Archbishop Desmond Tutu

Archbishop Desmond Tutu

In December 2013, when Nelson Mandela passed away, I shed a tear for the loss of a great one, a father of a nation.

I was living in Botswana when Mandela was released from jail, became leader of the ANC and then president of South Africa. It was a privilege to be so close to history. 

I moved to Australia in 1996, when Mandela made Archbishop Desmond Tutu chairman of the Truth and Reconciliation Commission that would grant amnesty to those who committed crimes during apartheid.

Here is the technical description of what that meant

The commission was empowered to grant amnesty to those who committed abuses during the apartheid era, as long as the crimes were politically motivated, proportionate, and there was full disclosure by the person seeking amnesty. To avoid victor’s justice, no side was exempt from appearing before the commission. The commission heard reports of human rights violations and considered amnesty applications from all sides, from the apartheid state to the liberation forces, including the African National Congress.

Pause for a moment to take this in. 

In its moment of liberation, a country that had been under minority rule based on race for decades with order maintained through repression, violence and fear was choosing reconciliation over retribution.

The idea was a stroke of genius. Reconciliation through amnesty was not revenge or a reconning or punishment. Indeed some still argue that it prevented justice for the thousands of victims of oppression. Alternatively, the Commission was the essential safety valve in an otherwise volatile transition of power and influence.

Cynics would have plenty to say about how retribution would have crushed an already ailing economy, and the ANC took the only sensible political path available. Talking up the economy is always the easy way to avoid emotional responsibility.

Except amnesty was all about the humanity needed to rise above revenge. 

One man came to embody the courage and integrity it took to deliver amnesty as a path to reconciliation, the chairman of the Commission, clergyman and activist Desmond Tutu, who passed away on boxing day 2021; the last seminal figure of the apartheid struggle and arguably its conscience.

Great leaders come in many guises. They appear in all walks of life and share one thing in common… 

They do what they say.

Desmond Tutu showed everyone what he believed in. He cheered for us, cried for us, called out the wrongs for us, championed compassion for us, and even reminded us that there is elegance in the simplicity of a pine coffin.

I know only snippets of this preacher’s life, but they are enough to realise he was one that we should remember to remind us what matters.

I salute Archbishop Desmond Tutu for his courage and goodness; may he rest in peace.