Journalism and Selection bias: “Real estate is still the best investment today, millionaires say”

Journalism and Selection bias: “Real estate is still the best investment today, millionaires say”

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I do not disagree that real estate investing can be a good place for investment … but …

When you read a news story like that linked here, note they only have quotes from those who have made money in real estate investing, with a notable bias towards those who directly in the real estate industry.

We do not hear from anyone who has lost money in real estate. We do not here from people who bought fixer upper properties only to find the cost of fixing resulted in little gain or even a loss over time. We do not here from property flippers who thought they would buy low and sell higher in a short period of time – but who got squished by changing market conditions. We do not hear from rental property landlords whose properties were damaged by renters or who find gains lost due to government price controls on rent.

This type of “selection bias” is common, especially in consumer finance news reports like this one. You should be conscious of selection bias when reading any news reports.

Example 2

A month ago a financial news report covered something in the health care industry that was said to be favored by one party. The article quoted a single “policy expert” who made negative comments about the proposal. The article did not disclose that the “expert” was not actually an expert but the head of a political activist and lobbying organization whose own web page said their goal was to shut down health initiatives of the opposing party.

This type of bias is common in reporting as the reporter can selectively choose who to include in their news report. Selection bias is a form of cherry picking and censorship.

Example 3

The Oregonian is the hegemonic newspaper of Portland, Oregon. In the past few months, the paper has run stories about assault victims who were transgender. In September, there were 2 stories of assaults on transgender victims in Portland and 1 outside Portland. Only 2 other non-transgender assaults were covered during the month. In August, they covered 4 assaults of which 1 was a transgender victim. Prior to June there were no stories; in 2018, there was 1 story regarding a transgender murder victim.

Data from the Portland Police Bureau shows an average of over 24 assaults in the city, per day, from August 1, 2018 to July 30, 2019. That is 720 assaults per month – of which only about 4 are covered in the paper.

When half of the reported assaults are transgender victims, this skews your perception of assault distribution. (All assaults are wrong, regardless of characteristics of the victim.)

2 out of 720 is less than 1/3d of 1% of assault victims.

From reading the Oregonian we are given an impression that assaults on the transgender community are widespread and increasing. Perhaps they are but no data has been provided to support that assertion. What we have is “selection bias” by the Oregonian.

Practice Factfulness and try to find out what the data says.

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