Lies, damned lies and statistics!
The newspapers, television and online sites report Government statistics and discuss what they mean for the economy, for jobs, and for prosperity.
But should we be so sure in the numbers themselves?
The vast majority of official statistics are built on surveys; you name it, there is a survey to collect the data.
Taking inflation, 300 people are dispatched around the UK with clipboards (now electronic) to collect the prices of everyday goods from retailers small (corner shops) and large (supermarkets).
For unemployment, researchers chase people round the country asking if they have worked.
These surveys collect data in virtually the same way as they did in 1945 before the computer age and before VAT returns, corporate tax returns and self-assessment data were submitted online.
GDP is the biggest survey of them all…
Forms are posted out to a selection of companies where they are completed and sent back, with either ongoing data or “informed estimates”. The data is then fed into a scanner and then through the models built in the Treasury the GDP figure pops out.
How the economy is performing, the actual size of the UK economy and whether we are growing or heading into recession. It’s pretty key information that every business owner should be be at least monitoring!
But does this matter?
If you are making business decisions and you are including Government statistics in your decision making process then just make sure you don’t weight the data too heavily.
I am indebted to Ed Conway writing in The Times for opening my eyes on the accuracy (or not) and reliability (or not) of key Government statistics!
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