Tuesday, January 18, 2011


Wrong Numbers/TheEconomist:

""""MEASURING things is hard. Counting mentions of them is easy. Google’s new search tool Ngram Viewer lets users find out how often a word occurs in the millions of books the firm has scanned. It also helps analyse the salience of abstract ideas—corruption, say—in different languages and places (see chart).

Lots of new numbers will be grist to the mills of those who compile international rankings. The hunger for crunchy comparisons of everything from venality to brainpower is huge and growing, not least among media such as this newspaper. It is tempting to try and pin ideas down by turning them into figures. Such measures can be handy. But they have serious flaws.

             ngram for..." copacetic" and "wallabies" 

The quality of economic statistics is often dubious in developing countries, for example. Figures are often only rough estimates and revised often and extensively. Inferences are risky. The latest version of the Penn World Tables, the best source for such numbers, has Equatorial Guinea’s GDP growing by 4% annually between 1975 and 1999. The 2002 version put the rate at minus 2.7%. The country may thus have been sub-Saharan Africa’s slowest-growing economy—or the second-fastest.

At least teachers have drilled generations of economics students in the limitations of GDP data, even if the public and politicians give them undue weight. But experts too can be fooled by “synthetic” indices combining several related measures into a single number which are often used to back broad claims. For instance, an index may rely on data on a few rather narrow items, such as the number of convictions for certain crimes, but claim to measure something broader, such as the quality of a country’s legal system.""""
After a few years of wading through the econo-eggheads' discussion of GDP, inflation, interest rates, market activity, and so forth one realizes that a great deal of statistical economics depends upon the fallacies of division and composition. When the GDP increases, that shall be assumed to be good for Consumers, though in reality that's rarely the case, even at the level of "sectors." A decision which may be "good"--or at least lucrative-- for ...the teachers' union may not be good for you, even if you are a schoolmarmie. Not real profound--in fact obvious as F**k-- but routinely disregarded.

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