Picking up on Paul’s blog last week about recent reputational damage to charities and its impact on the “future of doing good” in our society, I recently went to a talk at the Royal Institution run by Pro Bono Economics – “Good Causes and Bad Statistics”. The theme was charities making bad use of statistics to support inaccurate claims and subsequently inflicting reputational damage on themselves.

The talk was given by the economist and FT columnist Tim Harford with an introduction from GOD himself (AKA Lord Gus O’Donnell). The discussion afterwards was chaired by Andy Haldane, Chief Economist and Executive Director of Monetary Analysis and Statistics at the Bank of England.

Harford ran through a number of examples of poor use of statistics by charities including the Oxfam campaign that ran in January this year, just in time for Davos.  The Oxfam report claimed that the richest 62 people in the world own the same amount of wealth as the poorest half of the world’s population – that’s 3.6 billion people – this wealth amounts to $1.76tr.  Trajectory note:  this equates to LESS THAN 1% of the total global wealth stock.

Billionaires

Infographic from the Oxfam press release

Now this fact is not wrong but it is misleading because the statistic is based on wealth as opposed to income.  In fact the “poorest people” in the world (as based on this wealth definition) will include many in the western world with for example, student loans or credit card debt. So it includes most of the audience at the Royal Institution that night and a number of Trajectory employees! It does not include poor people in the developing world such as an African subsistence farmer who has no access to credit.  As Harford said…

“The number is true, but it’s also BS because it doesn’t help us understand the big issue – nor was it designed to do that. The purpose was to drive people to [Oxfam’s] website and harvest their emails.”

Harford points out that it would have been much better for Oxfam to have run a story about income inequality instead – but the problem is that that data is not simple to explain. Deborah Hardoon is the deputy head of research at Oxfam UK – she wrote the following article in the Guardian last weekend, where she tries to relate these wealth data to inequality and gets confused ….she limply concludes…

“While the scale of the global wealth distribution is informative, we are limited to what we can learn about changes of less than 1% of the total wealth stock.”

In the Pro Bono Economics lecture, Harford said  that “with the truth, i.e. accurately calculated statistics, charities will be able to ask themselves more serious questions about what must be done to tackle the issues their beneficiaries face.”  And that headline grabbing numbers will “do little more than harm their reputation…Bad facts breed cynicism from the general public and dilute the discourse.”

Of course, this lesson is not just limited to charities.