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This is mind-boggling. How do people who've presumably graduated high school make these mistakes? Even if you've utterly failed to understand the concepts of "

This is mind-boggling. How do people who've presumably graduated high school make these mistakes? Even if you've utterly failed to understand the concepts of "market cap" and "gross domestic produce", there's simply nothing about those terms that suggests they might be comparable.

littlestymaar 8y ago
You know, people make bad comparisons all the time. My favorite one is the electricity sector, especially when it comes to renewable energy: people compare the «amount of energy» produced by a solar plant (kWh), to the «amount of energy» consumed by a household (also in kWh). But this comparison is pointless (as long as we don't have ways to efficiently store electricity power) because there's no way you could supply a household with the electricity the solar plant produce: when the solar plant produces its «energy», the household doesn't consume much (if anything since most people aren't home at day) and when the household consumes electricity, the plant usually doesn't produce much because it's night or close to it. The only useful comparison unit when it comes to an electric grid is «power» not «energy» (as long as we have no storage), yet people uses energy as a comparison all the time …
- Ensorceled 8y ago
  That’s a bad example of a bad comparison. It’s a very good, mostly accurate and approachable way to get people to understand how much electricity is generated by a specific method. Your demand that the mechanism for communicating “scale of electricity generation to the lay person” also include a mechanism for communicating the intricacies and vagaries of the power distribution system is ludicrous. Unless, of course, you have a better way to communicate this information to my mom, a non-technical 75 year old?
  - littlestymaar 8y ago
    The thing is: the problem is complex, and hiding this complexity behind a misleading comparison doesn't help. It makes people think they understand, and now they have an opinion on the subject. Too bad if this opinion is based on a completely flawed understanding due to a poor comparison. But people aren't that stupid, they can understand a lot of this complexity if you take 5 minutes to explain it to them (we're not talking about quantum physics here). I've been teaching how the grid works to people in jail, and I doubt your mom has less ability than the average French inmate. Of course five minutes is more than the 3 seconds it takes to use the fallacious «energy» comparison, and I think the problem lies more in the laziness of the knowledgeable people than the lack of technical knowledge of the general population.
CJefferson 8y ago
Why aren't they comparable? They are two amounts of money. I can compare my mortgage payment to the cost of Apples, or how much my monthly phone bill is in oranges.
- mkirklions 8y ago
  Because market cap is Number of outstanding shares * current market price. If Apple sold 90% of their shares in a day, the price would be close to 0.
  - che_shirecat 8y ago
    minor nitpick, but Apple (the publicly traded corporation) by definition does not own any shares outstanding and therefore would have none to sell. But yes, if 90% of Apple shareholders sold in a single day, something would be terribly wrong.
- thedufer 8y ago
  No, they have different units. GDP is measured in currency/time (the denominator is usually a year) whereas market cap is measured in currency. Think about how much sense it makes to say "200 miles? That's about as far as the top speed of a Nascar car!" There's kind of a valid comparison happening, but it requires the reader to correctly guess the time period you're talking about for the speed.

littlestymaar 8y ago

You know, people make bad comparisons all the time. My favorite one is the electricity sector, especially when it comes to renewable energy: people compare the «amount of energy» produced by a solar plant (kWh), to the «amount of energy» consumed by a household (also in kWh). But this comparison is pointless (as long as we don't have ways to efficiently store electricity power) because there's no way you could supply a household with the electricity the solar plant produce: when the solar plant produces its «energy», the household doesn't consume much (if anything since most people aren't home at day) and when the household consumes electricity, the plant usually doesn't produce much because it's night or close to it. The only useful comparison unit when it comes to an electric grid is «power» not «energy» (as long as we have no storage), yet people uses energy as a comparison all the time …

Ensorceled 8y ago
That’s a bad example of a bad comparison. It’s a very good, mostly accurate and approachable way to get people to understand how much electricity is generated by a specific method. Your demand that the mechanism for communicating “scale of electricity generation to the lay person” also include a mechanism for communicating the intricacies and vagaries of the power distribution system is ludicrous. Unless, of course, you have a better way to communicate this information to my mom, a non-technical 75 year old?
- littlestymaar 8y ago
  The thing is: the problem is complex, and hiding this complexity behind a misleading comparison doesn't help. It makes people think they understand, and now they have an opinion on the subject. Too bad if this opinion is based on a completely flawed understanding due to a poor comparison. But people aren't that stupid, they can understand a lot of this complexity if you take 5 minutes to explain it to them (we're not talking about quantum physics here). I've been teaching how the grid works to people in jail, and I doubt your mom has less ability than the average French inmate. Of course five minutes is more than the 3 seconds it takes to use the fallacious «energy» comparison, and I think the problem lies more in the laziness of the knowledgeable people than the lack of technical knowledge of the general population.

CJefferson 8y ago

Why aren't they comparable? They are two amounts of money. I can compare my mortgage payment to the cost of Apples, or how much my monthly phone bill is in oranges.

mkirklions 8y ago
Because market cap is Number of outstanding shares * current market price. If Apple sold 90% of their shares in a day, the price would be close to 0.
- che_shirecat 8y ago
  minor nitpick, but Apple (the publicly traded corporation) by definition does not own any shares outstanding and therefore would have none to sell. But yes, if 90% of Apple shareholders sold in a single day, something would be terribly wrong.
thedufer 8y ago
No, they have different units. GDP is measured in currency/time (the denominator is usually a year) whereas market cap is measured in currency. Think about how much sense it makes to say "200 miles? That's about as far as the top speed of a Nascar car!" There's kind of a valid comparison happening, but it requires the reader to correctly guess the time period you're talking about for the speed.