euphemisms

Measurement again

/ jdc / Leave a comment

From the New York Times:

During the boom years of the Bush presidency — remember them? — economic growth was an especially unreliable indicator of how most Americans were doing.

Our problem, again, is that semantically dead word ‘economics’. ‘Economic growth’ is an especially fun one, not least because it actually refers to growth in GDP, which is something that’s kind of confusing anyway. Look at this catalog of misery:
The numbers were impressive, but the gains were lopsided, benefiting executives and investors far more than hourly workers and salaried employees. Because the growth was fueled by reckless lending and borrowing, it created an illusion of wealth even as many Americans lost ground…

The government reported that the economy grew at a surprising 3.3 percent in the second quarter, while productivity (the measure of how much workers accomplish per hour) soared. Unfortunately, those bounces did not mean a rebound in the lives of most Americans.

Growth rose, but so did unemployment. Productivity surged, but wages fell. Fixing that disconnect is the central economic challenge for the next president.

Increased exports were responsible for last spring’s strong economic growth numbers. But selling more abroad has not led to more manufacturing jobs or working-class pay raises at home.

Oh my. One point is that the popular metrics – like ‘growth’ – clearly aren’t capturing everything that’s relevant, but we knew that. Another would be that it’s therefore pretty odd that we continue to use the word economics when, lo, it’s actually two degrees away from making sense: first, it usually means something like GDP or unemployment or productivity or something, and second, even that wouldn’t actually tell a proper story. 
Yet a third point is that the title of the article is “Real Life Economy”: seems like there’s a bit of a trust issue developing with the metrics the media reports when they talk about ‘the economy’. Economists look silly again, but was it their fault? And are we surprised?

Euphemism bingo

/ jdc / Leave a comment

Time for round two of economics euphemism bingo! This time I was especially exasperated because the article in question (from BBC News) is about the China-Tibet issue, not about business or stocks or some place where the euphemisms hide something unimportant.

Let’s wade right on in:

“Some say that is not practical – that an independent Tibet would not be viable. It might struggle to cope economically.”

Wouldn’t have enough money? Lack of resources? Lack of infrastructure?

“A “one-country, two-systems model” is one possibility. So far, that model has gone well in Hong Kong – although Hong Kong and Tibet are at very different stages of development.”

OK, tell me about the differences, then. What’s a ‘stage of development’? Why is it important?

“When they revised their plans for Tibet in the aftermath of the late-1980s protests, China’s leaders thought a programme of rapid economic development in Tibet would stifle calls for political change.“

Economic development how? More money? More resources? More investment?

Tibetans are frustrated despite heavy economic investment.

Delete economic? What is economic investment? What is non-economic investment?

To me, it’s just lazy. Just say what you mean. The word “economics” is not a crutch or a bin into which you sweep all the stuff you don’t want to talk about. Just stop using it altogether.

Measurement

/ jdc / Leave a comment

Just after talking about the euphemistic use of “economy” yesterday, I found an even better one here:

“Nearly all Italians drink bottled water rather than the piped stuff. The industry is worth an estimated 3.2bn euros (£2.38bn) a year to the Italian economy.”

It would be very refreshing if they’d just say “GDP”, since that’s what they mean. That wouldn’t make it any less understandable either, because “economy” is equally vacuous. Let’s play the show and tell game again: what does the quotation mean?

It can’t mean that “if no bottled water was sold, people would spend 3.2bn euros less” – I’m sure they’d find another way to spend it. It can’t mean “worth 3.2bn euros a year to the Italian resource allocation”, because that’s not a sentence. It can’t mean that “Italian workers/producers would get 3.2bn less in wages/payments a year”, because I’m sure that they could do something else besides produce bottled water.

My best guess is “the Italian bottled water industry makes sales worth 3.2bn every year”. Why, oh why, can’t the reporter simply say that? It’s not remotely the same thing as any of the other suggestions I just made, yet I guess they’re all technically possibilities if we read “economy” as “system of production and consumption” or something like that. If I want to be really obnoxious I could ask whether the reporter has measured every consequence of the hypothetical disappearance of the Italian bottled water industry to come up with his figure.

More to the point, let’s forget about the absurdity of the quotation in itself and ask why the “worth” of any effect on the “economy” measured in money? This screams a confusion of metric and quality, a cardinal sin of positive science; even if I could get an accurate figure for the effect of something on “Gross Domestic Product”, I still think “worth” is too loaded a term.

A big chunk of the gulf between theoretical economics and empirical testing of real-world relationships is the metrics we use. Our abstractions work (or can, or should work) in a world where we measure outcomes agnostically: if you care about this. Theoretical economists can play in imaginary worlds all day, exploring the “relationships” between fundamentally unmeasurable things under their assumptions. On the other hand, some imaginary concept like “utility” is singularly useless if we want to actually talk about the real world. Empirical economists must deal with this problem somehow: if you want to talk about the effect of this measurable thing on that measurable thing you must explicitly ignore the intangible (like, perhaps, satisfaction).

Then what conclusions can we draw? This affects that, but not how “good” it is. This is, again, the reason why economics can never be a technocratic prescription of what “should” be done; we simply have no real-world metric to answer the question, and our theoretical metrics are unobservable. It’s the power and beauty of the science – we don’t have the answers. Is someone pretending to? Just for fun, I Googled “what’s wrong with GDP”. When our metrics are the sole determinant of policy, of course the metric – and, by extension, economics – comes under intense attack.

Now that’s all well and good until we get to economics teaching, practice and discussion which ignores this important conclusion. I don’t deny the challenge of constant vigilance to make sure student, reader, researcher know that we’re dealing with only what we can measure, but nothing short of a commitment to acknowledge the limitations of measurement at every turn will be enough to dispel the notion that the science of economics can tell us what to do.

Euphemisms

/ jdc / Leave a comment

It’s just semantics, but I wish there was an easy solution to the problem of using the word “economics” as a euphemism for real stuff. How unusual would it be for this story on General Motors’ headache-inducing losses to expire without a use of the word “economics” or “economy”? There’s actually only one:

“But the worsening economy in the United States led to higher fourth-quarter losses in the region: $1.1 billion, compared to $30 million in 2006.”

What does that mean? Does it mean “people are losing their jobs”? “There might be inflation going on”? “People are defaulting on their mortgages”? Seriously, if it means anything in itself, I don’t know what it is. I even looked up the word “economy”, and I think the definition that’s being implied is “the system or range of economic activity in a country, region, or community”: almost a perfect tautology.

That old writer’s maxim “show, don’t tell” should be, in my ideal world, applied to every use of the phrase “worsening economy”, “economic trends”, “the economy”, and all the others you can think of. They’re empty on two levels: structurally there’s the reflexive definition, but more importantly in a news story designed to inform, it obscures whatever the actual thing is.

Here’s another example:

“The Bank of England cut UK interest rates last week to 5.25% from 5.5% in an attempt to prevent a major slowdown in the economy.”

What does “major slowdown in the economy” mean? More unemployment? Less money for the common man? So help me, GDP? It surely can’t mean a “slowdown in the allocation of resources”, because that’s not a sentence. Show, don’t tell. Actually, the second example actually might be a step up from the first because it has the slightly less loaded “slowdown” rather than “worsening”. Don’t tell me how to feel when whatever you’re talking about happening happens!