The Paranoic Impulse in Current Discourse

Econbrowser:

I'm cynical enough to believe that numbers quoted by governments and private companies are selected so as to put themselves in as good a light as possible (after all, the Bush White House was happy enough to sit on a global climate change report for a couple of years, and to defund statistical programs that measure the behavior of low income households). But this view is distinct from the perception that the statistical agencies that collect US national income and products account data (the BEA), the CPI and PPI and employment statistics (the BLS), industrial production and capacity utilization (the Federal Reserve), and import and export data (BEA/Census) purposefully and consciously distort and manipulate the data for their own nefarious purposes.

In my view, the reason why so many hold onto these views is because it's so much easier to remain ignorant, and leap to the conspiracy view, than to do the hard work to understand why the statistics are imprecise measures of economic concepts, and why they are revised over time. After all, the former requires nothing more than taking somebody's word, the latter entails reading the supporting documentation, comprehending what the terms used mean, and applying some basic math and statistics skills...And if that's too hard, there are many people trying to help (For instance, Jim Hamilton cited some work by Oldprof on the BLS birth/death model in his last post).

As I noted in my previous post (The Government's Macroeconomic Series: X-Files, Dilbert, or Resource Constraints?), there are (at least) three different categories of explanations for the shortcomings of government statistics. One is the conspiracy view (X-Files), one is the incompetence view (Dilbert -- although upon reflection, this should be called "pointy-haired boss"), and one is a realization that government statistics are generated by organizations with limited resources, facing legal constraints on data collection, and confronted with an ever-changing structure of the economy.

So, if one wants improved government economic statistics, then tell your elected representative to keep up support for proper funding of the statistical agencies (time series here) FoxBusiness has some reportage.

See also Mark Thoma. Dean Croushore has a good review of why macro statistics exhibit the characteristics they do over different vintages.

Posted via web from Jim Nichols