Comments on: Can national statistics be self-fulfilling? http://blogs.reuters.com/felix-salmon/2012/04/26/can-national-statistics-be-self-fulfilling/ A slice of lime in the soda Sun, 26 Oct 2014 19:05:02 +0000 hourly 1 http://wordpress.org/?v=4.2.5 By: mudlark http://blogs.reuters.com/felix-salmon/2012/04/26/can-national-statistics-be-self-fulfilling/comment-page-1/#comment-38450 Fri, 27 Apr 2012 18:46:13 +0000 http://blogs.reuters.com/felix-salmon/?p=13498#comment-38450 You say this as if it is something new, but the UK (and most of the rest of the world) has historically generally estimated the GDP pessimistically and subsequently adjusted it up, while the US has generally estimated optimistically and then adjusted it down.

Are people not spending because of statistics? Of course not. They are not spending because they have less money in their pockets. Only this month, with the public sector pension changes, the government has taken about £100 million per month out of the economy.

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By: MrRFox http://blogs.reuters.com/felix-salmon/2012/04/26/can-national-statistics-be-self-fulfilling/comment-page-1/#comment-38420 Fri, 27 Apr 2012 05:04:13 +0000 http://blogs.reuters.com/felix-salmon/?p=13498#comment-38420 This – ^ ^ – here from 5thDecade was more persuasive in its original Argentine-Spanish/Greek-accented iteration.

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By: FifthDecade http://blogs.reuters.com/felix-salmon/2012/04/26/can-national-statistics-be-self-fulfilling/comment-page-1/#comment-38415 Fri, 27 Apr 2012 01:23:53 +0000 http://blogs.reuters.com/felix-salmon/?p=13498#comment-38415 What has been self-fulfilling about the UK situation has been the politics. For a year before the last General Election the Conservatives were talking down the economy, saying it was broken, that it would take years to fix, and that there was no money. For the first year after getting elected, they continued saying the same things, and after two years of it, it really started working: people stopped spending, they started paying down debt instead. This then pushed growth down. With lower growth, debt as a percentage increased, and so more austerity was planned.

Even now, 88% of the planned austerity has NOT yet arrived in the UK economy! When it does hit, this will scare people even more when it does finally arrive, and so growth will suffer again, increasing debts as a percentage, causing more austerity and so on. Until someone stops screaming “Austerity is the only cure!” and brings some positivity to the front of people’s minds, people will not spend, companies will not invest, and the claims that the economy is broken will have fulfilled their own prophecies.

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By: dWj http://blogs.reuters.com/felix-salmon/2012/04/26/can-national-statistics-be-self-fulfilling/comment-page-1/#comment-38411 Fri, 27 Apr 2012 00:42:55 +0000 http://blogs.reuters.com/felix-salmon/?p=13498#comment-38411 This has been studied, and voters vote more based on how they think the economy as a whole is doing than based on their perception of their own situation. Errors in election-year statistics go directly into the election outcome, even excluding the effect of self-fulfilling prophesies within the economy itself.

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By: crocodilechuck http://blogs.reuters.com/felix-salmon/2012/04/26/can-national-statistics-be-self-fulfilling/comment-page-1/#comment-38403 Thu, 26 Apr 2012 21:00:46 +0000 http://blogs.reuters.com/felix-salmon/?p=13498#comment-38403 Felix

Heisenberg’s Uncertainty Principle states that one can not simultaneously know both the position and the momentum of a sub atomic particle. The uncertainty principle states a fundamental property of quantum systems- not about the observational acuity of current technology.

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By: alea http://blogs.reuters.com/felix-salmon/2012/04/26/can-national-statistics-be-self-fulfilling/comment-page-1/#comment-38399 Thu, 26 Apr 2012 19:58:06 +0000 http://blogs.reuters.com/felix-salmon/?p=13498#comment-38399 “Expectations of accuracy and reliability in early estimates are often too high. Revisions are an inevitable consequence of the trade off between timeliness and accuracy. Early estimates are based on incomplete data.”
http://www.ons.gov.uk/ons/dcp171778_2635 78.pdf

As usual, the media are doing a terrible job at putting the data in perspective.

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By: KenG_CA http://blogs.reuters.com/felix-salmon/2012/04/26/can-national-statistics-be-self-fulfilling/comment-page-1/#comment-38394 Thu, 26 Apr 2012 19:29:07 +0000 http://blogs.reuters.com/felix-salmon/?p=13498#comment-38394 You asked that question just for me, didn’t you Felix? You knew I would say of course, statistics can be self-fulfilling, because a market based economy is driven by positive feedback. If people believe the economy is growing, they are more likely to spend and invest, resulting in economic growth, and if they think it is shrinking, they will reduce spending and investments, yielding a recession.

When unchecked, positive feedback in the economy will lead to bubbles and depressions. It has to be attenuated and dampened (the positive feedback response needs to be delayed as much as possible), and offset with negative feedback, to keep things from spiraling out of control (all bubbles burst, and depressions are often terminated by wars). One way to dampen and attenuate positive feedback in a growing economy is to increase the tax rate on capital gains for short term investments. This will prevent speculative gains from being fed back into the system – you know, like flipping houses that are bought with no money down and drive the prices even higher.

In a shrinking economy, we need to make sure more capital gets injected into the economy. We can do that by penalizing hoarding and rewarding investment, and if that doesn’t get that job done, we have to resort to the government printing and spending money. That’s not desirable, but if those with more capital than they could possibly use in 100 lifetimes refuse to deploy it, we shouldn’t just let the rest of the economy suffer.

So thanks for asking.

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By: jomiku http://blogs.reuters.com/felix-salmon/2012/04/26/can-national-statistics-be-self-fulfilling/comment-page-1/#comment-38392 Thu, 26 Apr 2012 19:18:17 +0000 http://blogs.reuters.com/felix-salmon/?p=13498#comment-38392 Funny how the statistics’ validity comes under fire when the results show the Conservative austerity approach is a dud.

That is the old distraction trick.

The original point of austerity was that it would inspire confidence and that would spark suppliers to produce. It was supposed to be an effective policy over the short and mid term. That has not happened so the game is now to argue about the statistics. The next game will be to argue that austerity has long term benefits. That would distract from the original argument, which was that in the choice between two policies that end up the same in the long run – austerity versus a more Keynesian approach – the choice of austerity was the better way to reach the same goal of fiscal solvency and economic health. It has not worked that way so we’ll change the debate.

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