Big Numbers Are Difficult To Contextualise

Numbers are hard. I don't mean that in a snarky way. It's easy to visualise a bunch of bananas, but it's almost impossible for most people to comprehend how many bananas are shipped around the world each year. It's easy to understand your pay-cheque, but understanding a national budget pales in comparison.

So British Gas announced profits of £969 million for the first 6 months of the year. Is that a big number?

Yes and no. It's more money than I'll ever have, and it's too big for me to easily understand. So let's try and break it down.

British Gas have approximately 12 million customers. £969,000,000 / 12,000,000 = £80 per customer. About £160 for the full year.

Oh. That suddenly doesn't sound like a big number. Don't get me wrong, I'd like my energy bill to drop by £13 per month. But it feels like a modest sort of profit.

But, of course, that isn't the whole story. That 12 million number is made up of domestic users and business users. I couldn't easily find out the proportions, but I did find this from Ofgem:

The price cap, as set out in law in 2018, reflects what it costs to supply energy to our homes by setting a maximum suppliers can charge per unit of energy, and caps the level of profits an energy supplier can make to 1.9%, protecting millions of households.

The price cap in the previous year was about £2,500 for the average customer. I don't know exactly how the profit cap was calculated, but let's say it is on top of the price cap. £2,500 * .019 = £47.50.

If British Gas did not make a profit out of domestic users, the average household would have saved £3.96 per month.

Again, it feels wrong that companies should profit of necessities during a time of crisis. I'd happily see the whole lot of energy companies nationalised and made to work for all of us. But I find it hard to argue that a profit of £1 per customer per week is a big number.

I couldn't find a breakdown of how British Gas's customers contribute to its profits. It's almost certain that poorer households are unlikely to be able to afford more efficient appliances. But, conversely, richer and larger households tend to spend more on heating. Averages hide the lived truth - they are an impersonal and imperfect measure.

Big numbers are hard for us to get our heads around. I remember being told that the reason Civil Service offices didn't have free tea and coffee (a standard perk in most British offices) is that the total cost was just too big. A tuppence per tea-bag is small, but multiplied by half-a-million employees drinking 3 cups per day over a working year - and suddenly there are headlines about how tax-payers are being fleeced for millions of pounds.

Big numbers cause big emotional reactions. But, as ever, context is everything.