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Home / Mike Norman Economics / Exaggerating China’s military spending, St. Louis Fed breaks all statistical rules with misleading graph — Ben Norton

Exaggerating China’s military spending, St. Louis Fed breaks all statistical rules with misleading graph — Ben Norton

Summary:
The Federal Reserve Bank of St. Louis published a jaw-droppingly misleading graph that portrays China as spending more on its military than the US. In reality, the Pentagon’s budget is roughly three times larger....When the St. Louis Fed published the deceptive graph on Twitter, it went viral, garnering hundreds of negative responses.Michael P. McDonald, a professor of political science at the University of Florida, quipped, “If they’re willing to put this out, just imagine the internal analyses the Fed conducts to manage the economy”.In an accompanying report, the St. Louis Fed admitted that China’s 2021 defense spending was just 1.7% of GDP, “which was the lowest share among the six nations in the figure…How to Lie with Statistics by Darrell Huff was required reading in my stat course

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The Federal Reserve Bank of St. Louis published a jaw-droppingly misleading graph that portrays China as spending more on its military than the US. In reality, the Pentagon’s budget is roughly three times larger....

When the St. Louis Fed published the deceptive graph on Twitter, it went viral, garnering hundreds of negative responses.

Michael P. McDonald, a professor of political science at the University of Florida, quipped, “If they’re willing to put this out, just imagine the internal analyses the Fed conducts to manage the economy”.

In an accompanying report, the St. Louis Fed admitted that China’s 2021 defense spending was just 1.7% of GDP, “which was the lowest share among the six nations in the figure…

How to Lie with Statistics by Darrell Huff was required reading in my stat course in college. That was in 1958. It is still  65 years ago. Huff was not a statistician himself but a journalist and he explained how statistics could be used to misrepresent. 

There is a big difference between a federal reserve bank doing this and news media. News media can plead journalistic mistake; a federal reserve bank can't. In fact, a mistake would be more worrisome than an intentional attempt to misrepresent, as Professor McDonald (above) implies.

But they make it clear in the article that China's spending is much less than the US. Doesn't that clear them? Compare this to a misleading headline and a correction contained deep in the article. This is actually standard practice in propaganda.

Geopolitical Economy
Exaggerating China’s military spending, St. Louis Fed breaks all statistical rules with misleading graph
Ben Norton

Not directly related, but peripherally. See also for a humor bonus.

Mike Norman
Mike Norman is an economist and veteran trader whose career has spanned over 30 years on Wall Street. He is a former member and trader on the CME, NYMEX, COMEX and NYFE and he managed money for one of the largest hedge funds and ran a prop trading desk for Credit Suisse.

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