Yesterday, the Pew Research Center released some data about the feelings of home owners. Pew reports that 62% of home owners feel optimistic about housing prices. This is remarkable, because the professionals, such as the National Association of Realtors, have decided that housing is in a slump.

What interests me about this research is that it doesn’t say much. If 62% percent feel optimistic, there is a significant number of people who feel pessimistic. If 38% are right, even only about their own houses, the drop in housing prices is very significant. So what does an average number like 62% really tell us?

This is the brilliance of Mark Penn’s book, Microtrends: The Small Forces Behind Tomorrow’s Big Changes. He let’s us look at these numbers differently. Where the Pew organization reports on “Americans” treating everybody as one average, Penn suggests that we should think about several groups moving in different directions. What I want to know is whether the pessimistic group has an adjustable mortgage or if they are planning to sell their house soon? Then housing prices really matter. If you are planning to stay in your house for many years, the prediction that prices will go up again seems very reasonable. I am sure that the realtors would agree. But that information we don’t have. So let’s not think in terms of average Americans. A minority can make all the difference

Seth Godin has another story about numbers and their use for marketing. Let’s make up some numbers. Numbers are being used for marketing purposes and sometimes get to be very silly. He makes this important point:

Do we need to know how much the Dow moved to a tenth of a point? No, of course not. But when we start delivering numbers with that level of accuracy, people can’t help but believe them.

I remember some years ago, the news in the Bar Area reported that we had a 73% chance of an earthquake in the next few years. Nonsense. We have several fault lines here and they all have a chance of producing an earthquake. For some that is 5%, others 13%, etc. You cannot simply add up these percentage, you have to average them, but that didn’t sell the news as well. So all of them added the chances up and said we will very likely have an earthquake soon. Stupid. Scaring us sells better and if we have to cook the books to do that, we will. Can I think of someone else who does that?

Technorati Tags: statistics, numbers, godin, mark penn, microtrends, housing, research, data

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