Apples and Oranges

Comparisons can be incredibly useful. We don’t understand things on their own terms, so it’s useful to describe how something you understand stacks up against something you don’t.

I’ll probably never see all the gold that’s ever been mined on Planet Earth, but if you tell me that it will roughly fill up an Olympic-sized swimming pool, I can get some idea. Likewise, you may never have seen an alien spacecraft, but if I tell you certain spaceships look like certain dogs, this familiar comparison may give you an idea of what to expect when the invasion happens.

These are apples-to-apples comparisons. You’re saying that Gala apples are less mushy than Red Delicious apples, but not that Gala apples are sweeter than oranges.

Unfortunately, advertisements aren’t always designed to give you the maximum amount of useful information, which can lead to apples-to-oranges comparisons. You might consider this on the forgivable side—after all, those products aren’t going to sell themselves—but headlines, too, have picked up on this irritating habit.

These headlines are the evil opposite of the Ample Sample concept—the idea that you can discern a great deal of information from a very limited source of data with enough clever thinking. Instead, they insist that you shut your brain down and just accept nonsense.

Here’s an example that triggered this entire rant in the first place:

Nvidia’s market cap matches Germany’s GDP

I get it—large numbers are really hard to deal with. The idea of a million—a thousand thousand—is difficult enough for us to contemplate, but you have to multiply a million by a thousand to get to a billion, and we’re talking about trillions here.

Why isn’t this like the Olympic pool/amount of gold ever mined comparison? Well, for one thing, both of those are talking about volume. You take X amount of gold out of the ground and throw it into this empty pool, and you can get a sense of how long it will take to fill the whole thing up.

Germany’s GDP is the amount of money the nation-state of Germany brings in per year. This includes every Euro of sales from automobiles to bratwurst that takes place in Germany, or which is conducted in German territory. You could think of this as “top line annual sales” for a nation-state if you’d like.

By contrast, market capitalization means how much a company is selling for. Take all the shares of a company and multiply them by the share price, and you have a big number—something like 4.7 trillion dollars in Nvidia’s case. If you know anyone walking around with an extra $4.7 trillion or so, let them know they could theoretically buy the biggest company in the world with that cash.

If the point of the headline was to shock, it probably does that job: nation-states and companies aren’t often compared in the first place, so it raises an eyebrow when I see this thoughtful, reaching type of comparison. The eyeballs start rolling when I realize that this is a categorical error.