In ‘crossword format’
The government just announced a reduction in VAT from 17.5% to 15%. How much money do you save per £100?
You’re at a magic show. The magician asks you to shuffle the cards (a normal 52 card deck) and hand them back to you. He asks a member of the audience to name a card. The audience member names the Ace of Spades. The magician draws a single card out of the deck. What is the chance (odds?) of the card drawn being the card named?
EOD: Answer Update (after 9 comments)
The papers/press/media have all been reporting that with a 2.5% reduction in VAT you’ll only be saving £2.50 in every £100 by working out the complex equation of “What’s 2.5% of 100?”. Of course this is clearly wrong.
In £100 payment inclusive 17.5% tax you’re paying £14.89 tax such that the item value would have been £85.11
A 15% tax on £85.11 would result in £12.77 tax.
£14.89 - £12.77 = £2.12 savings.
Of course as Nigel points out, there is actually a more complex answer here too (based on my question), and that even for a specific right answer, there can be multiple right answers.
Also everyone has been writing in to letters pages commenting how pointless the reduction is, as £2.50 is not a lot of money. Which proves my point that most people are idiots who don’t understand anything. I wont explain here why a 2.5% decrease is significant, just to say image how people would have reacted had VAT gone UP by 2.5%.
The question really is about how we evaluate risk. And how we consider the factors involved. There is no real right answer here, the right answer is in how we explain the answer. Of course some answers are more right than others.
Marc was the most correct here, or put another way, had a most correct answer.
A simple way of looking at it is like this
- The random chance of pulling a specific card out of a deck is 1 in 52
- However we know we are at magic show and we know a magician probably knows what we are doing so we could consider the odds are then really 1 in 1.
- However looking at the factors again, we know a magician probably is going to not pull the card out the first time to build suspense, so we could say the odds are 0 in 1.
- Or we can factor together different tricks (as Marc did) and calculate even more precise odds.
So those are the two answers (or two of the answers) to today’s Friday Pop Quiz questions. I’ll be honest I stole the questions from the BBC R4 More or Less podcast. If you want to listen to more detail you can watch it on iPlayer or download here
I quite liked pop quiz Friday. More for the debate and interesting perspectives (including @Jack (2)’s). I might do this every week. If I can think of enough interesting questions.