Editing 2892: Banana Prices

{{comic
| number    = 2892
| date      = February 9, 2024
| title     = Banana Prices
| image     = banana_prices_2x.png
| imagesize = 564x378px
| noexpand  = true
| titletext = It's a linear extrapolation, Michael. How big could the error be? 10%?
}}

==Explanation==
{{incomplete|Created by a MANDALORIAN BANANA ARMORER - Please change this comment when editing this page.}}

[https://www.youtube.com/watch?v=Nl_Qyk9DSUw ‘It’s one banana, Michael. What could it cost, $10?'] is a line from an {{w|Arrested Development}} episode (Season 1, Episode 6, "Charity Drive", 2003) that became a well-known meme used to mock out-of-touch elites. The character who spoke this line (Lucille Bluth, a rich socialite) made a satirically high estimate for the price of a banana because she had never bought her own groceries.  According to the graph, the banana price at the time of that episode was actually just under 25 cents, and the price at the time of this comic’s publication (2024) is around 30 cents.

This comic channels Lucille Bluth’s confident ignorance to provide a graph and its conclusions that are similarly satirical in their ignorant simplicity and statistical illiteracy. This mechanism serves to illustrate a number of ways to violate statistical best practices and to "lie with data." The additional use of an "unreliable narrator" device (embodied by the caption writer) gives this comic several layers of meaning. The title text continues the Bluthian ignorance by presuming that the error in their conclusion is less than 10%, even when the three predictions (from 120 years to 220 years) differ by over 80%.

To initially mislead the reader and to ultimately demonstrate how easy it is to be fooled by various methods of "lying with data," Randall has his Bluthian narrator combine several statistical "sins" in one graph, such as:
* false [[Precision vs Accuracy|precision]]
* referring to a logarithmic extrapolation as linear
* using very recent rates instead of long-term averages in making distant predictions
* articulating multiple potential scenarios that are actually highly correlated with each other

At first, the comic looks like a wry observation that the irony of this sitcom line will "probably" be obsolete in a century or two. This comic shows a graph of three predicted prices for bananas over the next 250 years, extrapolating from the current price. The three extrapolations use (1) the general inflation rate (a value dominated by the cost of housing), (2) the inflation rate for fresh fruit, and (3) 50 years of historic banana prices. The comic presents these extrapolations to claim that in a century or so the irony of the sitcom quote is likely to be anachronistically meaningless. 

(While these extrapolations look linear, they are actually ''exponential'', since a linear extrapolation on a graph with a logarithmic scale is actually an exponential extrapolation. The graph is log-linear, with price as a logarithmic scale on the vertical (left) axis, which makes it possible to visualize the dubiously projected exponential growth as a straight line.)

The fastest rising extrapolation is the one for “general inflation,” and this assumption predicts a banana’s price to rise from 30 cents to $10 in approximately 115 years. This 115-year increase corresponds to an average long-term inflation rate of about 5.2%. This rapid increase is the source of the caption’s claim that banana prices could exceed $10 in a century.

So the first way the graph reveals the statistical illiteracy or bias of its author is the use of a recent general inflation average, 5.2%, instead of the historic US average of 3%. There’s little reason to expect the current regime of high inflation to continue, on average, for a century. Almost all economists expect it to revert to its historic norm over the long-term.

Besides getting the inflation rate wrong, another way the extrapolation could miss the mark is if, in the next 100 years, there were a {{w|Banana#Pests, diseases, and natural disasters|massive banana crash or extinction}}, as has {{w|Gros Michel banana|happened before}}, likely due to the banana's lack of genetic diversity. In this case the sharply reduced supply of bananas could send the price past $10 very quickly.

Another, more subtle, illustration of false precision is the graph's use of three different models for the extrapolation of banana prices. At first glance, using three different trend lines seems to show a "range" of potential scenarios and acknowledge the prediction's uncertainty. (This is a tool in Scenario Thinking, the analytical practice of articulating ''divergent, uncorrelated'' scenarios to explore various "potential futures.") However, the three underlying trends of the prediction models are highly correlated: general inflation is highly correlated to fruit price inflation and banana price inflation. Using three different trends that are all highly correlated is scant better than using just one.

An additional sign that the graph-maker is seeking to mislead (or is just statistically illiterate) is the choice to plot prices on a log-scale. This is quite unusual. Exponential data like viral spread and population growth can make sense to visualize with a log-linear graph, but using one for commodity prices is quite atypical and suspicious.

Finally, the reference to "BLS/St. Louis Fred" appears to lend credibility to the graph’s conclusions. (The {{w|Bureau of Labor Statistics}} and {{w|St. Louis Fed Financial Stress Index|St Louis ''Fed''}} are widely respected sources of economic data.) But crucially, the sourcing only validates the solid line showing the historic price record. It’s nigh simple to use accurate data to make terrible extrapolations. Citing these sources is this context is one more example of how to fool gullible readers into giving the resulting prediction more credibility than it deserves.

The title text is a wink from Randall about this unreliable narrator by using the ignorant tone of Lucille Bluth to wryly acknowledge, in fact, that the error of the extrapolations greatly exceeds 10%. Just as Lucille was very wrong about a $10 banana (a price threshold), so, too, is the Bluthian speaker of the title text very wrong about the 10% error (a proportional change). It does so in the form of a meta-joke about the false precision of extrapolations. Assuming that the error couldn't be more than 10% shows that the Lucille speaker continues to be satirically off-base, presuming far more accuracy from a multi-century prediction than is warranted. 

Overall, the comic is a clever commentary about the false precision of extrapolation and how easy it is to make absurdly precise predictions seem credible, illustrating its point by initially misleading a gullible reader with its own false precision, and wrapping it all in a pop-culture reference. 

In truth, any economic extrapolation into the distant future is at most an educated guess, likely to be quite wrong, with an expected error far in excess of 10%. (A rare example of a domain in which 75-year predictions are highly accurate is national demographic age charts, since the number of babies born this year in a given country is causal of the number of 75-year-olds alive in 75 years.)

A statistically literate author would likely have plotted the same information using these best practices:
* normal linear axes
* using a range of potential long-term inflation rates illustrating various realistic scenarios (e.g., 1%, 2%, 3%, 5%, 10%)
* rephrasing the conclusion to say that the sitcom’s line might be obsolete in a century in a scenario in which long-term inflation is a very high average of 6%

This comic uses several common xkcd themes:
* '''Log scales''' and their peculiarities are a recurring xkcd theme, and this is the second comic in a row to play with logarithms (the prior one being [[2891: Log Cabin]]). 
* It's also the second comic in the last four to involve '''predictions across centuries''' (i.e. [[2889: Greenhouse Effect]]). 
* Another '''extrapolation''' comic include [[605: Extrapolating]]. And this comic looks a lot like [[1007: Sustainable]].

==Transcript==
{{incomplete transcript|Do NOT delete this tag too soon.}}

:[A graph with the x-axis showing time, from the years 1950 to around 2275. The y-axis is a log scale showing the price of a banana from $0.10 to over $10.00. A label called "Price of a banana (BLS/St. Louis ''Fred''[https://fred.stlouisfed.org/])" show a rising trend in the price of a banana. There are two dots on that trend. One is labeled "Episode airs" and the other one "Now". 3 extrapolations shown as dashed lines labeled "General inflation rate", "Fresh fruit price trend" and "Banana price trend" extend until reaching the $10 mark, indicated by 3 dots.]

:[Caption above the graph:] "It's one banana, Michael. What could it cost? $10?"

:[Caption below the panel:] That line probably has another century or so left.

{{comic discussion}}

[[Category:Line graphs]]
[[Category:Timelines]]
[[Category:Fiction]]
[[Category:Extrapolation]]