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Posts Tagged ‘statistics’

Respecting the Science

Some folks – perhaps only stats nerds like yours truly – noticed this item in the press last week: “Second-Quarter G.D.P. Revised Sharply Higher … Government statisticians gave the American economy a lift Thursday when they sharply revised their calculation of the nation’s second-quarter growth to an annual rate of 2.5 percent, up from an initial estimate of 1.7 percent.”

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What is striking about this huge revision – the new estimate means that the economy was growing almost 50% faster than initially estimated – is not so much the statistical work itself, but how the media, the financial markets, and public read them. The economic numbers are only approximations. Indeed, this 0.8 point revision is less than the average revision made on quarterly growth rates over the last almost 30 years. The problem is not with the statisticians working to estimate these numbers; they are top-notch. The problem is the non-statisticians who fail to appreciate how noisy the data are and who make strong claims and key decisions based on small variations that experienced researchers treat with appropriate distance.

(As a footnote to this post, I ask why two scholars recently dismissed economics as a science on the grounds that economists don’t predict the future – an odd argument.)

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