Tuesday, May 27, 2014

95.8% of Averages Are Nonsense

Sent to Marketplace today:
Your interview with Jules Pieri on the morning of May 27th concerning Title IX for business missed a crucial point. Pieri assumes that such a large gap in venture capitalist money (only 4% to women) is due to sexism.

But men tend to pursue degrees in the sciences, such as engineering and computer science. These skills more easily translate into start-up ideas compared to the softer sciences women tend to major in. Even a study NPR reported on in March found investors chose businesses proposed by men 68% of the time, not 96%. There's a lot more going on than the raw averages suggest.

Venture capitalists make money by investing in good ideas. But at the heart of Pieri's Title IX proposal is a bizarre notion: these capitalists care more about being sexist than about being profitable.

I am deeply disappointed you didn't question her on this all-too-common over-simplification.

David Youngberg
Asst. Professor of Economics
Montgomery College