Reinhart and Rogoff story shows how important it is to check your indicators
This month two academic researchers showed that there were errors in the calculations behind the claim by economists Carmen Reinhart and Kenneth Rogoff that the relationship between government debt and real GDP growth is weak for debt/GDP ratios below a threshold of 90 percent of GDP. Above 90 percent, median growth rates fall by one [...]
Top ten reasons for reading misLeading Indicators: How to Reliably Measure your Business
There are many books that tell you what to measure to succeed in a business strategy or to improve business performance. Ideas on what to measure may indeed be very useful. But these ideas won’t help you, and may even be harmful, if you do not know whether what you are measuring is misleading you. [...]
Are Americans getting wealthier or poorer? It depends on how you measure “wealth.”
The standard measure of wealth is GDP per capita. The chart below shows that Americans have been getting continually wealthier for decades, with a few blips here and there (source of data). The measure of wealth—Gross Domestic Product, is based on the dollar value of economic transactions. Such a measure depends crucially on the definition [...]
Why your customers may not see things the way you do
Are your customers experiencing something completely different from what your indicators tell you they are experiencing? Probably. Suppose a retail company with branches of different sizes measured some aspect of customer service in each of its branches, say wait times. Will the average wait time be a good representation of the average customer’s experience? Take [...]
What business can learn from government statisticians
UN Statisticians tooted their own horns Wednesday, and showed their numerical prowess by scheduling World Statistics Day date on 20.10 2010. They even made a video that highlights the importance of the “availability of high quality statistics at the national, regional and global levels,” the “unbiased official statistics” and “objective and accurate information” government statisticians provide (see [...]
GDP a “a misleading indicator of economic progress”
A Singapore MP points out the weakness of the GDP, and we explain why background information is as or more important that the measurements themselves.
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