Ethics in Statistics

Topics: Enron, Ethics, Enron scandal Pages: 5 (1476 words) Published: June 27, 2011
ASSIGNMENT:Ethics in Statistics

There are a number of possible ways in which unethical behavior can arise in statistics and researchers should steer clear of these. It is relatively simple to manipulate and hide data, projecting only what one desires and not what the numbers actually speak, thus giving birth to the famous phrase “Lies, damned lies and statistics”. However, this doesn’t happen all the time and there is no reason not to believe in the conclusions of a statistical analysis (Siddharth, 2010).

Ethics in statistics is not straightforward and can be quite complex at times. It also greatly depends on what kind of statistical analysis is being done. Unethical behavior might arise at any point – from data collection to data interpretation. For example, data collection can be made inherently biased by posing the wrong questions that stimulate strong emotions rather than objective realities. This happens all the time when the survey is aimed to try and prove a viewpoint rather than find out the truth (Cruz, 2010).

Other unethical behaviors might include scientists not including data outliers in their report and analysis to validate their theory or viewpoint. This happens both in pure and social sciences. By obscuring data or taking only the data points that reinforce a particular theory, scientists are indulging in unethical behavior (Morales, 2010).

Ethics in statistics are very important during data representation as well. Numbers don’t lie but their interpretation and representation can be misleading. For example, after a broad survey of many customers, a company might decide to publish and make available only the numbers and figures that reflect well on the company and either totally neglect or not give due importance to other figures.

Surveys and polls often indulge in unethical behavior to reinforce a viewpoint. For example, a survey might not reflect true public opinion because it is not statistically significant. However, many surveys do not publish this along with their poll and this can be misleading.

As a researcher it is important to be objective and provide the complete picture that has been obtained from the experiment without hiding any details or overemphasizing something for personal gain. Ethics in statistics are important to give the right direction to research so that it is objective and reflects the truth. In February 2001, Enron was named exceedingly unfathomable, meanwhile they “window dress” their books in effort to hide their debts and Wall Street remained in the dark. August of 2001 Enron’s Vice President Sherron Watkins wrote an anonymous letter to Mr. Lay describing accounting methods that she felt would lead the company to “implode in a wave of accounting scandals” (North, 2005). On 14th August2001 Jeff Skilling, the chief executive, resigned and was replaced by Kenneth Lay. Mr. Kenneth Lay, once again CEO emailed his employees stating that they expected the company’s stock prices to go up. On the other hand, Mr. Lay sold off his own stock in Enron. Kenneth Lay also took $300 million over three years, for the purpose of services rendered to the company. On 12th October 2001, Arthur Anderson’s legal counsel directed workers who audit Enron’s books to destroy all except the basic documents. The real scandal broke on 16th October 2001 when Enron announced that they loss $638 million, due to “failure of its internet investment”. Immediately the Securities Exchange Commission (SEC) announced that they were investigating Enron.

See, Enron had adopted an accounting technique called the Special Purpose Entity (SPE). Initially Enron used SPE appropriately by placing non energy related business into separate legal entities. On the other hand they tried to manufacture earnings by manipulating the capital structure of the SPE by hiding their losses and they did not have independent outside partners that prevented full disclosure. Also they did not disclose the risks in their...
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