Beware Those Economic Numbers

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We have varied sets of economic numbers to try to measure the world around us. All of them are pretty hazy because the economy’s a pretty big and pretty complicated thing. We only even get close to any accuracy about GDP – just to use an example – about 6 months after the relevant period has passed. We’re not, thus, really able to use GDP as a reliable guide to policy. To policy action that is, rather than a measure of what we did.

We’ve also entirely another set of economic numbers which are those deliberately constructed to persuade us down a particular policy path. For example:

Politics is festooned with such manipulations. Poverty is some ghastly number, except we measure it as less than some percentage of median income. That’s not poverty, that’s inequality.

The housing charity Shelter says there are 300,000 homeless people in Britain, when the number sleeping rough – what many people would think of as homelessness – is more like 5,000. They reach that higher figure by counting as homeless all those being aided by the welfare state into having a roof over their heads. Then there’s the oft-cited figure of 120,000 people who apparently lost their lives due to austerity – a claim taken apart by Guy Dampier on these pages last year.

My latest favourite is the claim that converting offices into housing means the loss of affordable housing. This rests on the argument that conversion without the requirement for planning permissions means the local council can’t take its cut from the project to build housing priced below market rates. It’s a very odd claim, especially given that the best way to increase the affordability of housing is to increase supply, not for the government to cross-subsidise a certain portion of our stock.

One of the most useful things Dominic Cummings can do in Whitehall is to root out these biased numbers. Insist that we count what we count and also that we call it what it is.

That insistence that inequality is poverty works by tugging on our heart strings about poverty. In order that we’ll attack inequality – something few care about – with the same energy we’d top up Oliver’s gruel bowl. Kill he method of measurement and you’ll take much of the steam out of the insistence.

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Esteban
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Esteban

Now more than ever I put no faith in any statistic unless and until I know it’s been vetted by those on the opposite side of the political fence. Unfortunately, once reported, a bogus stat can get planted in the public mind and it’s damn near impossible to undo the damage. A few years back during a debate a leftist brought up some shocking new statistic on hunger in America. Since the “study” in question had just been released his opponent didn’t know that it was referring to “food insecurity”, not hunger. So all the people who weren’t going hungry… Read more »

Pcar
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Pcar

@Tim Worstall Last paragraph should be in bold and on every Tory MPs daily read, especially: Kill the [disingenuous] method of measurement and you’ll take much of the steam out of the insistence As for Shelter “We are not an accommodation provider, nor are we a soup kitchen or provider of immediate food and clothing. Shelter advises, supports and represents the homeless and badly housed, and campaigns to change Government policy.” Campaigning against Government … who fund Half their £ 60 Million annual income – Dominic Cummings, are you reading this? A fake charity inflicting misery: Why did Shelter back… Read more »