OnPoint by Keith Ng

Read Post

OnPoint: Media beat-off

75 Responses

First ←Older Page 1 2 3 Newer→ Last

  • Kyle Matthews,

    Kyle, I'm sorry but that's how the results in the household expenditure survey are reported

    I'm not sure where you're getting your figures from. The HES for year ended 30 June 2004 is available here. The section on 'Housing Group' reads:

    Housing remained the largest component of household spending, accounting for 24 cents in every dollar spent. Average weekly expenditure on housing was $217 in 2003/04, up 19.1 percent from $182 in 2000/01.

    Households owning their own house with a mortgage, spent 16.7 percent more on mortgage payments in 2003/04 than in 2000/01. These households spent on average $247 per week on mortgage payments in 2003/04, compared with $212 per week in 2000/01. Mortgage payments include mortgage-interest payments, mortgage-principal repayments and interest on revolving credit mortgage/loans.

    For households that rented, average weekly household expenditure on rent increased by 10 percent, to $185 in 2003/04. Rent payments accounted for 25 percent of the total average weekly expenditure of households who pay rent.

    Nothing in there comes even close to what you said originally:

    on average, weekly household expenditure on mortgages was $81.40 in 03/04 (average rental expenditure was $58) - far below Hickey's assumed average mortgage of $225/week.

    Indeed $247 is higher than Hickey's assumed average mortgage of $225/week.

    The 2007 HES is also on the site, if you were looking for more up-to-date figures.

    Since Nov 2006 • 6243 posts Report Reply

  • Paul Campbell,

    remember the American credit crunch is a bit different - theirs was triggered by mortgage rates going over roughly 6% and their government is worried about stagnation and regularly pushes their interest rates down to keep their economy ticking over (they also don't have to pay income tax on money used to pay mortgage interest - and if they are smart can lock in 30 year mortgages - many who are having problems are doing so because they didn't) - ours have topped 10% and are driven by a reserved bank that's pushing interest rates up to stave off inflation.

    The US Fed of course has a lot more leverage than NZRB does and when they stimulate their economy they also make their housing crisis less (they also as a result push up our dollar as the carry trade rushes in) - here the RB with nothing other than inflation on its radar (by statute) doesn't care.

    The point I'm trying to make here is that while a credit crunch like in the US can happen here it's less likely to have the soft landing many in the US may see

    Dunedin • Since Nov 2006 • 2622 posts Report Reply

  • Keith Ng,

    Kyle, not all households rent or have a mortgage. The average that Christopher quoted from was the population average.

    So, if one person rented, one person had a mortgage and another person owned their house free-hold, then the average rent and the average mortgage would be much lower - but it would be useful, in that it reflected the average expenditure on housing.

    The figures you quoted was "average mortgage for those with a mortgage" and "average rent for those who rent".

    Auckland • Since Nov 2006 • 543 posts Report Reply

  • Kyle Matthews,

    So, if one person rented, one person had a mortgage and another person owned their house free-hold, then the average rent and the average mortgage would be much lower - but it would be useful, in that it reflected the average expenditure on housing.

    So I don't get then how you can make this comment:

    Why is this a problem? Because the latter includes those who don't have a mortgage, such as those who don't have a mortgage because they can't afford one. So he included people who can't afford a mortgage in the averages, and the numbers show that the average family – woah – can't afford a mortgage.

    Isn't it a contradiction to bag Hickey for including people who don't have a mortgage, and then support Christopher for include people who have already paid off their home, in the average mortgage?

    How can it be useful to say "Hey look, mortgages are only $81/week, everyone can afford that", when clearly mortgages aren't $81/week. Surely the useful figure is the $247 from the HES, which should be compared with the income of houses that have mortgages?

    Since Nov 2006 • 6243 posts Report Reply

  • Rich of Observationz,

    On the subject of memes, thank you Robyn.

    Although in my defence I don't recall seeing the word in common use until Wired hit the newstands (around 25 years after Dawkins wrote his book), with it appearing twice in every article. I think it was mandated in their style guide, along with ritual obsesience to Nicholas Negroponte.

    Back in Wellington • Since Nov 2006 • 5550 posts Report Reply

  • Keith Ng,

    I can't speak for Christopher, but the point that I took out of that was that the samples were mismatched.

    i.e. Because the average mortgage payments of the HES sample was only $81/week, clearly, they are not the same people as the ones which pay $247/week. Therefore, you shouldn't match the income of the $81/week people with the mortgages of the $247/week people.

    Auckland • Since Nov 2006 • 543 posts Report Reply

  • Rich of Observationz,

    I believe that, if appropriately qualified, one can work for Stats and be paid to engage in arguments such as the ones above. All day. It palls, apparently.

    Back in Wellington • Since Nov 2006 • 5550 posts Report Reply

  • Kyle Matthews,

    Ah OK. In that case, I suspect the relevant figure from 2003/4 is:

    Housing remained the largest component of household spending, accounting for 24 cents in every dollar spent. Average weekly expenditure on housing was $217 in 2003/04, up 19.1 percent from $182 in 2000/01.

    Still not particularly useful, as we should be comparing the mortgage costs and incomes of those people that have mortgages, not those that don't.

    While this data isn't matched in the survey results, presumably they still have the raw data, where it would be easy to limit the data set to that group.

    Since Nov 2006 • 6243 posts Report Reply

  • Angus Robertson,

    To paraphrase substituting one high cost purchase (a house) for another:

    i.e. Because the average Ferrari price of the HES* sample was only 50c, clearly, they are not the same people as the ones which pay $500k for a Ferrari. Therefore, you shouldn't match the income of everybody with Ferrari buyers.

    * this is a guess, the HES unaccountably does not cover this data.

    Auckland • Since May 2007 • 984 posts Report Reply

  • Christopher Worthington,

    The central problem with Hickey's analysis is using a population average for income and an average mortgage based on a sub-population of people with mortgages. He either should have used the higher income figure consistent with the sub-population with mortgages, or used a measure of housing costs that reflects the total population average. As to which is the better choice, it depends on whether the question is whether the average household is better off or whether the average household with a mortgage is a better off.

    The 2007 HES has changed the way that housing expenses are treated so I'm a bit wary about the direct comparison, but according to table builder the average mortgage payment for those with mortgages was $314/week. Note that the housing group data Kyle has quoted include more than just rents and mortgages, and the 2007 equivalent no longer includes interest payments.

    Since Jan 2008 • 25 posts Report Reply

  • Mike Graham,

    Using averages can distort things immensely. Consider a grossly simplified example - in a sub-population of 20 people, 19 have a mortage of $100k and 1 has a mortgage of $1m.
    Q: What's the average mortage
    A: $145k

    Q: How many have a mortgage (and therefore repayments) below the average?
    A: 95%

    Lies, damned lies, and statistics! (especially averages)

    Auckland • Since Nov 2006 • 206 posts Report Reply

  • Keith Ng,

    Averages are simple tools. There are limitations to what they can tell you, but at the same time, they're really easy to use and can be useful in many situations.

    It's like a hammer - you really need to know what it does, when to use it, and when not to.

    Auckland • Since Nov 2006 • 543 posts Report Reply

  • Russell Brown,

    It's like a hammer - you really need to know what it does, when to use it, and when not to.

    Sometimes, you need a sonic screwdriver.

    Auckland • Since Nov 2006 • 22834 posts Report Reply

  • Rich of Observationz,

    What I think isn't being considered is the massive wealth that even an ordinary house can represent.

    A paid-off house of median value ($450k) in Auckland represents $70k of pre-tax income that would need to be earned to pay that mortgage.

    It seems to me that a lot more people in NZ are asset rich from houses than have high incomes.

    And most of these asset-rich "mass affluent" pay little or no tax, given that first properties are tax free and taxation of investment gains is pretty haphazard.

    Back in Wellington • Since Nov 2006 • 5550 posts Report Reply

  • Shep Cheyenne,

    The perverse limitations of these types of calculations hold a family on the East Coast or Northland living in shacks and caravans to be on a par with the mansion in Remuera, if it's paid off.

    Or that the indebted rich are worse off than the above mentioned family.

    Do the averages count the Prison pop as well?

    What Mike Graham said.

    And Keith haven't I heard that before ...
    "You gotta know when to hold 'em, know when to fold 'em, know when to walk away, know when to run..."

    Since Oct 2007 • 927 posts Report Reply

  • Mike Graham,

    Averages are simple tools ... and can be useful in many situations.

    but in many situations create distortions. Another recent example is (in my view) the way the Real Estate Institute is always quoting average sale prices etc., where the median would probably give a more realistic picture. However, I suspect the average real estate agent (and journalist) wouldn't understand the difference between the mean and the median.

    Auckland • Since Nov 2006 • 206 posts Report Reply

  • Kirsten Brethouwer,

    http://www.susanblackmore.co.uk/Books/Meme%20Machine/mmsynop.html

    In 1999 Susan Blackmore published the Meme Machine, (so yes around 25 years after Dawkins coining of..) with foreword by mr. Dawkins. Actually it's a rather useful concept, I always thought. Susan Blackmore's interpretation of Memes is probably more helpful in understanding for example religion then Dawkins' own the God Delusion.

    Waiheke Island • Since Nov 2006 • 35 posts Report Reply

  • Shep Cheyenne,

    I can't find anything online about Mimeme but I did find Mimesis.

    http://dictionary.reference.com/browse/Mimesis

    Said like mimi with 2 syllables (plus a third for sis).

    I like saying it as 'mi-mi as opposed to 'meams' & have found enuf to do so and counter objection in any drunken discussion about Dawkins - if he can make shit up - so can I.

    Since Oct 2007 • 927 posts Report Reply

  • Keith Ng,

    The perverse limitations of these types of calculations hold a family on the East Coast or Northland living in shacks and caravans to be on a par with the mansion in Remuera, if it's paid off.

    Dude, you're going to make me cry. These calculations do no such thing. It does not say, nor claim to say, anything about *every* family, or anything about any specific family.

    Another recent example is (in my view) the way the Real Estate Institute is always quoting average sale prices etc., where the median would probably give a more realistic picture. However, I suspect the average real estate agent (and journalist) wouldn't understand the difference between the mean and the median.

    You just made me factcheck you. I can't speak for every real estate agent or journalist, but the REINZ use *median* sale prices as a matter of course.

    For example.

    Auckland • Since Nov 2006 • 543 posts Report Reply

  • Craig Ranapia,

    Sometimes, you need a sonic screwdriver.

    Poo, laser -- who'd have sonic?

    North Shore, Auckland • Since Nov 2006 • 12370 posts Report Reply

  • Shep Cheyenne,

    Keith when you're happy to write this:

    "So let's talk about interest rates, not bloody cheese."

    Knowing kids are hungry out there, well we're not on the same page are we?

    Since Oct 2007 • 927 posts Report Reply

  • linger,

    It's easy to fall into the trap of taking "the average person" as being a construct with some reality equivalent to "most people", and even easier to ignore lives that don't fit that constructed model. So I guess we have to ask, has that really happened here?

    Granted, the fact that on average (or even, for most people -- though that doesn't necessarily follow) accommodation is a much larger expenditure than food doesn't make it true for everyone. Granted also, those on the lowest incomes have the least flexibility to adjust expenditure when food prices rise. So there is a real social problem in food price inflation.

    Nevertheless... when we see editorials, letters and talkback whine on cheese, we see predominantly the views of the middle class, for whom, as Keith points out, the focus would be better placed elsewhere.

    Now back to the accommodation expense stats.
    Focussing on average "total accommodation expenditure from all sources" across the population is certainly an improvement over trying to measure "average mortgage" across the whole population. But I can't see how it avoids placing all people with the same expenditure on accommodation into the same category, whether their expenditure is low because the accommodation in question is worthless, or because it is freehold. Which makes the "average" on this dimension of limited value as a construct.

    Unless, of course, I have misunderstood, and the recommended solution is instead to take the "average mortgage" only across mortgagees; the "average rent" only across renters ... but then what do we do with freeholders? Would accommodation expense figures be more useful if they were to routinely include maintenance and rates expenditure as well? (That would be one way of separating out the homeless from fully paid up homeowners.)

    Tokyo • Since Apr 2007 • 1931 posts Report Reply

  • Mike Graham,

    You just made me factcheck you.

    oops. My anti real estate agent bias is showing through.

    Auckland • Since Nov 2006 • 206 posts Report Reply

  • Mike Graham,

    My excuse - the QV figures that were in the news yesterday are average prices. (I hate being wrong!)

    My apologies to the REINZ.

    Auckland • Since Nov 2006 • 206 posts Report Reply

  • Che Tibby,

    frankly?!

    it's a bloody outrage what people are having to do to make ends meet in these difficult times.

    a BLOODY OUTRAGE!!

    the back of an envelope • Since Nov 2006 • 2042 posts Report Reply

First ←Older Page 1 2 3 Newer→ Last

Post your response…

Please sign in using your Public Address credentials…

Login

You may also create an account or retrieve your password.