Wednesday, March 29, 2017

Memo to the White House—if it matters, measure it

Memo to the White House—if it matters, measure it

The Fraser Institute’s motto is that “if it matters, measure it.” Our motto is a constant reminder of the importance of measuring the effect of government policy interventions on people’s lives, and it guides our work every day.
Of course, measuring complex social phenomena is much easier said than done. We recognize that some things are extremely difficult to measure, and that there are often disputes among well-intentioned and knowledgeable researchers about the best way to measure them.

Despite these challenges, at the heart of our motto is a conviction that facts matter, and that careful analysis of data can help us better understand the world and the likely impact of policy interventions.
So it was worrying to see the White House’s new press secretary Sean Spicer take to the podium earlier this week and decline to answer when asked where the unemployment rate of the United States stands today.
The unemployment rate is an important (although imperfect) economic metric that helps us understand how many people are in the process of looking for work but unable to find it. Mr. Spicer correctly noted that there are several different ways to measure unemployment, but ultimately declined to say which one he felt was most important and why. He explained his unwillingness to do so by saying that the President is “not focused on statistics” but rather on “if people are doing better.”
There would be nothing wrong with Mr. Spicer noting that the unemployment rate is an incomplete measure of an economy’s health, and listing other things that ought to be considered—the labour force participation rate, for example. But the statement that the administration is “not focused on statistics” is concerning. Of course, what ultimately matters is whether people are “doing better,” but it’s impossible to know whether they are or not without looking at statistics.
Examining large datasets and complex economic models may not be as emotionally compelling a way to learn about the state of the economy compared to listening to a story from an out-of-work man about his struggles, but ultimately we must rely on data or else we are reduced to trying to understand what is going on relying purely from anecdotes, which may or may not be representative.
Mr. Spicer’s reluctance to focus on the unemployment rate as an overall barometer of economic success is perfectly reasonable—serious economists have (particularly in the years since the great recession) identified important shortcomings with the unemployment rate as a comprehensive tool for measuring economic health. But the new U.S. administration must not reject all statistics outright as being unhelpful. The data points that make up large data sets are real people, and only by measuring what is happening to large and representative samples of them, can we begin to understand the world and to make sensible policy choices.
The Trump administration enters office facing major challenges, among the most important of which being a long-run decline in economic freedom in the U.S. As it unveils its policy agenda, it should recognize the importance of statistics and data in guiding policy choices. We would therefore encourage the new administration to consider our motto, and adopt a rigorous commitment to measurement.

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