Sunday, February 1, 2009

Sloppiness, statistics, and lies

I was watching this week's weekly Presidential address on YouTube and came across this quote, which I feel compelled to comment on. President Obama has talked about accountability, and accountability in how he frames the current situation and his reaction to it is therefore extremely important. From the address (heard and copied directly from official transcript:

"Yesterday we learned that our economy shrank by nearly 4 percent from October through December."
- President Obama, Jan 31, 2009

At best this is sloppy wording. Unlikely in prepared remarks. I could maybe believe it if it was off-the-cuff in an interview. I think it falls best under the heading of "lies and statistics". That is, trying to make statistics say what you want them to.

Given that Obama is pushing for the stimulus package, it is in his interest to paint the situation as darkly as possible. Just as it was in his interest to call it the "worst economic crisis since Great Depression" when he was on the campaign trail.

This number was discussed in an earlier post on this blog, and the number is a manufactured number that desribes an "annualized rate" for economic growth (contraction in this case as it's negative).

Saying "our economy shrank by nearly 4 percent" is simply not true. It's as if I lost 5 lbs between October and December, which would be 20 lbs at an annualized rate. I can't then say "I lost 20 lbs from October to December." It's as simple as that.

To quote the true economic statistic you either have to say:
1. "our economy shrank by less than 1% from October through December"
2. "our economy shrank at a yearly rate of nearly 4% from October through December"

It is still the largest since 1982 if quoted that way, but it does make a difference. Imagine being told your bank account went down "less than 1%" versus being told "almost 4%". It definitely frames perception about the size of the problem differently.

Now - how to hold President Obama accountable for this mis-statement? I suppose the best way is to write an email to the office of the president. I'm off to do that now - URL:

[Update - I sent the following to the President's office through the link above. You're allowed 500 characters - I was economic and spared 11]

I hope that President Obama's commitment to accountability starts with his own words. I was disappointed to hear it said in the Jan 31 weekly address that "our economy shrank by nearly 4 percent from October through December". The fact that 4% (really 3.8%) was an "annualized" number makes that statement false. The truth would be "our economy shrank by less than 1%...". Whether or not it is, this smells like exaggeration to further an agenda. I would hope for a public correction.

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