Innumeracy in the MSM

David Cay Johnston notes how the three networks covered the drop on Wall Street on Monday.

Now that the House has rejected the $700 billion bailout, what we have to fear is not fear itself, but fear-mongering--particularly by our leading news organizations.

Katie Couric opened the "CBS Evening News" last night with video of the House clerk declaring the 205-228 vote, and then she said, "That sets off the biggest decline in stock prices ever."

Wrong.

Brian Williams opened the "NBC Nightly News" with the same error, saying it was "the worst single day drop ever."

These are not minor errors. They are profound, ridiculous, amateur-hour errors that surely frightened many people, especially in the context of the tone of the coverage. The stock market has had much bigger one-day declines. How about right after 9/11? How about 1987, when the Dow fell 22 percentage points, more than three times the slightly less than 7 percent drop Monday?

ABC was almost as bad. Charles Gibson read from his teleprompter words that were technically accurate, but so misleading that the effect was to instill fear in the hearts of millions who did not catch the technicality. He reported "the biggest one-day point drop" in the stock market.

That's scary unless you know what it means.

As my friend Fred Brock, one of the best copy editors who ever worked at The Wall Street Journal and The New York Times, said when I read him the transcripts last night: "That doesn't mean anything; it's utterly meaningless."

Stock indexes matter in terms of percentage changes, not point changes, because the base changes all the time. How many points an index like the Dow or the broader Standard and Poor's 500 went up or down compared to the day before, or over a week, or over another contracted time period is a legitimate measure when trying to figure out the short-term direction of the market. But when you are comparing it to trading from say 2001 or 1987 or 1929, counting points, instead of percentages, is absurd.

They do this all the time when talking about economic statistics. As a teacher, I have to take renewal credits in order to renew my teaching certification every five years. I realize that journalists don't have any sort of professional certification, but perhaps the leading journalists on the network news should take some renewal courses on statistics and economics.