Economic Statistics Don't Always Serve Public Well

Article excerpt

NEW YORK _ The presidential campaign and the election gave striking evidence that what serves the government, statistically speaking, may not always serve the people.

It was by no means the first example of the phenomenon, which has been growing for more than a decade, but it is vivid enough for almost everyone, including President Bush, to understand.

Citing government statistics, the president, during the campaign, declared that conditions were improving. Looking in their pocketbook, many voters failed to see that they were. Confusion prevailed, and the damage was incalculable.

Here are bare-bone elements of one aspect of the situation.

For purposes of official policy, government officials gather and professional economists analyze vast amounts of economic data. They know the limitations of the numbers. These measurements were never intended to be used popularly or superficially, but because of a growing awareness and interest in economic affairs they have come to play that role.

Because of that dual role, the statistics often confuse rather than clarify.

For instance, to obtain the underlying trend of unemployment, government statisticians exclude from the jobless rate those people who have given up looking for work, often because of discouragement.

They also adjust the figures to eliminate purely seasonal variations. These processed numbers serve their original purpose, which is to guide macroeconomic policy.

However, those outside government often consider the data an actual reading of the economy's temperature at any given time. They are considered a measurement, which they are not. Confusion results.

To illustrate, it is possible for the jobless rate to fall while labor markets weaken. It is also possible for thousands of people to find jobs, but the jobless rate increases. …