1

Statistical Analysis Jeffrey M. Kihien-Palza Johns Hopkins University LDP 22 Date Submitted: March 17, 2012

THE PROBLEM WITH GROSS DOMESTIC PRODUCT (GDP) IN PERU

Figures often beguile me, particularly when I have the arranging of them myself; in which case the remark attributed to Disraeli would often apply with justice and force: "There are three kinds of lies: lies, damned lies and statistics." - Mark Twain's Own Autobiography: The Chapters from the North American Review

1. Background of the Problem Gross National Product GNP is the total value of all final goods and services produced within a nation in a particular year, plus income earned by its citizens (including income of those located abroad), minus income of non-residents located in that country. Basically, GNP measures the value of goods and services that the country's citizens produced regardless of their location. GNP is one measure of the economic condition of a country, under the assumption that a higher GNP leads to a higher quality of living, all other things being equal. Gross Domestic Product GDP Concept: The gross domestic product (GDP) per capita is the national output, divided by the population, expressed in U.S dollars per person, for the latest year for which data is published. 2. Description of the Statistics According to the International Monetary Fund (IMF), Peru has a GNP of US$167,846 Billion, and a GDP of US$5,614, meaning that in theory everyone one in the country of 29,897,755 inhabitants earns US$5,614 per year. 3. Problem with the Statistic Model The first issue is that not all Peruvian Population is on working age, according to the National Statistics Institute, 42% of the Peruvian population is under 18 years old. A percentage of this population does not work because age, they are children, and other recently entered to the labor market earning a minimum wage on US$200 per month. At least 42% of the Peruvian Population is not earning US$5,614 per year. Poverty Disparity Distribution of wealth is very unequal, according to the CIA World Factbook, the lowest 10% of the population owns 1.4%, at the highest 10% owns the 35.9% of the country wealth.

Wealth Distribution by Regions Peru is divided on 24 regions. The wealthiest region is Moquegua where I was born. According to the National Institute of Statistics, the GDP in Moquegua is US$10,747, the double of the national average when only dividing the regional GNP by the number of inhabitants. The GDP show in the statistics Moquegua is the most economically develop region in Peru, and one on the wealthiest cities in Latin America. Again statistics mislead reality; there is poverty in the region, mostly concentrated in the Andes.

3. A Different Method to Address the Issue To find out a more accurate income distribution, I am dividing the population by segments such as A, B, C, D, separating then by income and wealth.

35.00% 30.00% 25.00% 20.00% 15.00% 10.00% 5.00% 0.00% Segmen A 2.7% Segment B 10.30% Segment C 28.90% Segment D 35.00% Segmeng E 23.10%

Segment A is the wealthiest in Peru. And is concentrate in coast urban areas of the country. Approximately 35% of the country wealth is concentrate on segments A and B. We can have another subdivision on segment, E; the lowest 10% on this segment is lives in extreme poverty, and only have a share of 10% of the country wealth.

CONCLUSION I have heard many times that numbers do not lie, however they can mislead an opinion just by changing data presentation. For that reason is important to analyze the background of the statistical problem, the data used, and other factor that can affect the final equations.

MISLEAD STATISTICS IN THE WAR ON DRUGS 1.Background of the Problem The government of the United States spends billions of dollars trying to control illegal trafficking, commercialization and use of cocaine in the United States. The idea in mind was to tackle down organized criminal nets of production and distribution of cocaine by seizing and destroying their cocaine. 2.Description of the Statistic The government is claiming that he is winning the War on Drugs, and that cocaine production has been affected, and in fact decreased according to the following statistic chart.

In fact the availability of cocaine I Cocaine availability has decreased sharply in the United States since 2006. Every national-level cocaine availability data indicator (seizures, price, purity, workplace drug tests, and ED data) points to significantly less availability in 2009 than in 2006. For example, federal cocaine seizures decreased 25 percent from 2006 (53,755 kg) to 2008 (40,449 kg) and remained low in 2009.

In fact as the chart shows, availability of cocaine in the U.S. market has sharply declined. There is no doubt that the government is doing an excellent work by seizing and destroying cocaine. However, we need to find out who is directly affected by the cocaine war. The next statistic chart will give us a better explanation about the issue of misleads statistics.

While the offer of the product cocaine decreases in the market, demand was steady and probably increases. The natural reaction of the market was to raise the price of the product by around 90%, and lowered the quality of the product. 3. Problem with the Statistical Model Chart one might probably show success in the War on Drugs, because there is less cocaine in the US market, however it does not affect the finances of cocaine dealers, they just increased the price and lower the quality of the product to satisfy demand. At the end earnings for cocaine dealers amplify. Conclusion American public must understand that the War on Drugs is extremely expensive, and only benefits local and foreign drugs dealers.