...because I feel like it's been a while since I've shared a pet peeve.
So I'm sitting here getting some work done with the TV on, and some car insurance commercial comes on.
I hate car insurance commercials. Why? Because they're either consistently bad at interpreting data or they're good at it and are being deliberately dishonest - and I don't like either of those things.
So on this one they talk about how the average person who switched from Allstate to this company "saved an average of $547". Argh - nails on a chalkboard. I'll let readers take a shot at why this bothers me before I answer.
UPDATE: So the problem here is a substantial selection bias. They always say that $X are saved by "switching" to their company. Often they'll go as far as this ad and even say $X are saved by switching to their company from a specific other company. That's all well and good, but the problem is you only switch companies if you get a better deal! There is no indication of how your expected savings will compare to this. Let's say insurance companies assessed everyone exactly the same premium on average, but there was some random variation across insurance companies for any given person. So no insurance company gives a "better deal" than any other insurance company. Now let's say you initially buy insurance after some kind of limited search process. In the future, you may switch. Because there's some randomness to it, there may be another company out there that would actually give you a better deal than you initially got. But the point is you'll only switch if they give you a better deal. So any insurance companies that assess their quality on the basis of the savings of switchers are always going to be able to tell you they can save you a bunch of money!
Different coverage is offered by different companies, etc. - and that complicates reasons for switching. But for me at least, insurance company advertisements are basically giant flashing billboards for selection bias. Enjoy the geckos and laugh at Flo, but forget whatever numbers they spew at you. Don't believe anything about any "savings" until you actually shop around for it yourself.
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