Teaching the Effective Use of Data in Business Coverage - Reynolds Week 2011

STEVE DOIGCRONKITE SCHOOL OF JOURNALISM

Math and Data for Business Journalism

Students

Donald W. Reynolds National Centerfor Business Journalism

at Arizona State University

Professors Seminar

Math and data

Journalism students are terrified of math and think Google answers everything.

Business coverage demands… Good math skills Good data analysis skills

We need to teach them how to use math to analyze data

Computer-assisted Business Reporting

Internet browserSpreadsheet: Microsoft ExcelDatabase manager: Microsoft Access?Statistics: SPSS?

Business math

Percentage changeCompound interestRatesConsumer price indexProbabilityLinear regressionExotica:

Gini coefficient H-H index Benford’s Law

Percentage change

Measure change over timeNEW / OLD – 1 or (new – old) / oldExample: $8 million profit this year, $5

million last year 8/5 - 1 = 1.6 - 1 = .6, or a 60% increase

Example: $5 million profit this year, $8 million last year 5/8 – 1 = .625 – 1 = - .375, or a 37.5% decrease

Compound interest

Calculates the effect of interest being added to principal over time, thus compounding the return

Future_value = present_value * (1 + i)^ni = interest raten = number of periods (i.e., 360 for 30 year

mortgage paid monthly)Many compound interest calculators on the

Web: http://www.webmath.com/compinterest.html

Rates

Allows comparisons between places/companies of different size, or comparisons across time

Examples: Accident rates, foreclosure ratesExample: Jonesville has 50 of 20,000 homes

in foreclosure; Metropolis has 5,000 of 2 million in foreclosure Jonesville: (60 / 20000) * 1000 = 3 homes per 1,000 Metropolis: (4000 / 2000000) * 1000 = 2 homes per

1,000

Consumer price index

Accounts for inflation; lets you compare prices over time in constant dollars

Price_now / cpi_now = price_then / cpi_thenGet CPI from Bureau of Labor Statistics at

www.bls.gov/CPI/

CPI example: Gasoline prices

CPI now = 216.3CPI in 1965 was 30.8Gasoline in 1965 was $0.30 per gallon.X / 0.30 = 216.3 / 30.8X = (216.3 / 30.8) * 0.30X = 7.02 * 0.30 = 2.11Therefore, gas in 1965 cost the equivalent

of $2.11 per gallon in today’s dollars.

Probability

Most likely use in business journalism would be to calculate the chances of some event occuring.

Also important in understanding p-values in research papers.

Example: WSJ calculated the chances of executive stock options being granted at the best possible time and used the results to show that dozens of companies were backdating option grants.

Linear regression

Useful for spotting outliersCompares how one or more independent

variables affect the value of a dependent variable

Relationship can be seen in an X-Y scatterplotTime-series regression: Time is X-axis

Other business statistics tools

Herfindahl-Hirschman Index: used to measure market concentration

Gini coefficient: measures inequality in wealth distribution

Benford’s Law: pattern of final digits in a collection of numbers can reveal expense account cheating or other man-made patterns.

Web sites your students should know: Company Web sites for industries they cover. Secretaries of State Web sites for incorporation

records. http://www.nass.org Hoovers for company and industry information, (but

it’s a pay site). http://www.hoovers.com Lexis/Nexis. http://www.lexisnexis.com/

Business data

Searching for data

Google (use advanced search)Google Finance: www.google.com/financeBingWolfram Alpha?

More websites with business data

Edgar for SEC filings. http://www.sec.govThe SEC site also contains enforcement data.

http://www.sec.gov/divisions/enforce.shtmlBureau of Economic Analysis for updated

state and regional economy data. http://www.bea.gov

The Bureau of Labor Statistics has even more economic statistics. http://www.bls.gov

The Federal Reserve has much information about monetary policy and banking. www.federalreserve.gov

Still more…

Patent and Trademark Office is sometimes useful. http://www.uspto.gov/

Don’t forget the U.S. International Trade Commission. http://www.usitc.gov/

And the U.S. Census Bureau for demographics. http://www.census.gov

U.S. Census Bureau

It’s much more than headcounting – here’s just a little of what business journalists can find at census.gov: Economic Census – local business data collected

every five years. County business patterns. Minority- and women-owned business data. Building permits. Foreign trade exports by state.

Census business data index page

http://www.census.gov/econ/www/index.html

Foreign trade data

For example, from the Census Bureau, downloadable from its Web site:

IRE resources for business journalists

http://www.ire.org/storeComputer-Assisted Reporting: A Practical

Guide, by Brant Houston.The Investigative Reporter’s Handbook: A

Guide to Documents, Databases and Techniques, by Brant Houston, Len Bruzzese and Steve Weinberg.

Numbers in the Newsroom: Using Math and Statistics in the Newsroom by Sarah Cohen. Part of the IRE Beat Book series.

More IRE resources

IRE Resource Center: www.ire.org/resourcecenter/

Why reinvent the wheel?More than 2,000 tip sheets from IRE and

NICAR conferences, many on covering the business beat and doing investigations.

Searchable database of more than 20,000 stories, both print and broadcast.

More IRE resources

The NICAR Database Library at http://data.nicar.org/

Databases for business journalists: SEC administrative proceedings. Federal contracts data. Home Mortgage Disclosure Act data. IRS Exempt Organizations. SBA business loans and disaster loans. Federal Audit Clearinghouse Database. Consumer Product Safety data OSHA Workplace Safety data Wage and Hour Enforcement

Good math resources

Innumeracy, by John Allen PaulosA Mathematician Reads the Newspaper, by PaulosPrecision Journalism (4th ed.), by Phil MeyerMath Tools for Journalists, by Kathleen Woodruff

WickhamCartoon Guide to Statistics, by Larry GonickStatistics Every Writer Should Know (website),

www.robertniles.com/stats/

Excel and web data demonstrations