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Stardate 20010614.0519 (On Screen): I own a marvelous little book called "How to lie with statistics" which I bought 25 years ago. I'm pleased to learn that it's back in print; it's a funny book and reads easily while educating you at the same time. Ostensibly a manual for how to use statistics to fool people, its real purpose is to teach you to not be fooled when these techniques are used against you. One chapter in the book discusses how to use graphs to deceive, pointing out that the technique can't be pinned on you since you're actually presenting the data. Still, you can present a graph in a way which makes the trend it shows look much more (or much less!) impressive than they really are.

This article contains a discussion about the Tivo company, including speculation that it is in massive financial trouble. What struck me about it was that they provided a chart for Tivo's stock price, and used a logarithmic scale. I've seen many "truncated charts" for stock prices (where they leave off the bottom part of the chart; this has the psychological effect of making the change seem more important than it is) but I've never seen a stock chart on a logarithmic scale. A logarithmic scale would have the psychological effect of making a price move look less important than it really is.

Price charts on all important publicly traded companies in the US can be gotten from NASDAQ now, and I commend them for invariably using linear, zero-based charts (which is the least deceptive way of plotting the data). This link presents the same information as the chart on CNBC's article. CNBC's chart makes it look like Tivo's price had slid a bit more than half if you ignore the labeling. NASDAQ's chart makes it clear that the decline is nearly 90% from highest to lowest. CNBC's chart makes things look better for Tivo than they really are

However, there's another strange thing: CNBC's chart cuts off in the middle of May. NASDAQ's chart is up-to-date, and during the time missing from CNBC's chart the stock price doubled from its bottom. This means that CNBC's chart makes Tivo's situation look worse than it is.

Is there an agenda here? I'm not really sure. CNBC's chart tries to present a company sinking steadily into the mud. NASDAQ's honest chart presents a more complicated picture. (discuss)