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# Math and Data for Business Journalism Students by Steve Doig

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### Math and Data for Business Journalism Students by Steve Doig

1. 1. Math and Data forBusiness Journalism Students STEVE DOIG CRONKITE SCHOOL OF JOURNALISM
2. 2. 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
3. 3. Computer-assisted Business Reporting Internet browser Spreadsheet: Microsoft Excel Database manager: Microsoft Access? Statistics: SPSS?
4. 4. Business math Percentage change Compound interest Rates Consumer price index Probability Linear regression Exotica:  Gini coefficient  H-H index  Benford’s Law
5. 5. Percentage change Measure change over time NEW / OLD – 1 or (new – old) / old Example: \$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
6. 6. Compound interest Calculates the effect of interest being added to principal over time, thus compounding the return Future_value = present_value * (1 + i)^n i = interest rate n = 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
7. 7. Rates Allows comparisons between places/companies of different size, or comparisons across time Examples: Accident rates, foreclosure rates Example: 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
8. 8. Consumer price index Accounts for inflation; lets you compare prices over time in constant dollars Price_now / cpi_now = price_then / cpi_then Get CPI from Bureau of Labor Statistics at www.bls.gov/CPI/
9. 9. CPI example: Gasoline prices CPI now = 226.4 CPI in 1965 was 30.8 Gasoline in 1965 was \$0.30 per gallon. X / 0.30 = 226.4 / 30.8 X = (226.4 / 30.8) * 0.30 X = 7.35 * 0.30 = 2.21 Therefore, gas in 1965 cost the equivalent of \$2.21 per gallon in today’s dollars.
10. 10. 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.
11. 11. Linear regression Useful for spotting outliers Compares how one or more independent variables affect the value of a dependent variable Relationship can be seen in an X-Y scatterplot Time-series regression: Time is X-axis
12. 12. Other business statistics tools Herfindahl-Hirschman Index: used to measure market concentration Gini coefficient: measures inequality in wealth distribution Benford’s Law: pattern of first digits in a collection of numbers can reveal expense account cheating or other man-made patterns.
13. 13. Business data 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/