Rounding: You’re Doing It Wrong

July 23rd, 2013 by Potato

In our most recent hydro bill, we received one of those little propaganda pamphlets explaining why our electricity bill has to go up again. In it is this little statement:

“For most Canadian households, electricity makes up about 1% of the household budget. In fact, one penny per dollar powers many things that we simply take for granted: lights; appliances; air conditioning[…]”

And then right be side that is a little city-to-city comparison, pegging a typical 1000 kWh Toronto Hydro bill at about $135.72 (ours usually comes in ~$100/mo; elsewhere they say a typical Toronto Hydro customer usage is 800 kWh/mo, which would scale to $108.58). Now combine those two pieces of information and you have Toronto Hydro saying that a household budget is $13,572/mo or $162,864/year (or using the slightly lower monthly usage, $130,291/year). That’s quite a bit above the actual household pre-tax income, let alone the spending budget.

They provide the source as Stats Canada, so of course I had to go fact check on them. In the table the total Canadian household expenditures for 2011 is given as $956B, with electricity at $17.4B. The percentage of the household budget that electricity represents is then 1.8%, which should be rounded up to 2%, not down to 1%. Even then it seems too low, putting the annual household spending budget above $70k, over $90k with that 1000 kWh bill — at about the level of pre-tax household income, rather than the spending budget. I’m pretty sure electricity likely makes up even more of the household budget than that.

Looking at the Stats Can data, we have a parent category for electricity called Housing, water, electricity, gas and other fuels. Now I couldn’t find detailed notes explaining this category, but here’s my best inference: the total should be right, but the subcategories might not be fully broken down. Within that Housing, water, electricity, gas and other fuels category are Paid rental fees for housing and Imputed rental fees for housing. We know from all the studies of the Canadian housing bubble that the ownership rate is about 70%, and that it should be the more expensive slice of the market that falls under the ownership umbrella, thus imputed rent should be a fair bit more than 70% of the total of rent paid and imputed rent. At $48B and $142B it is, but just by a bit: rent makes up about 25% of that total. My suspicion is that there are some people with all-inclusive rents whose electricity is lumped under that subcategory rather than electricity proper, under-reporting the amount Canadians spend on electricity.

Anyway, at the very least the Toronto Hydro pamphlet should have rounded to 2% (small numbers either way, but you know, double what they said).

One Response to “Rounding: You’re Doing It Wrong”

  1. Netbug Says:

    I think it’s time for a strongly worded Potato letter.