Obama’s chained inaccuracy

(This article by Philip Green and George Gabor first appeared as a special to the Financial Post on August 16 2012). The Obama administration is considering adopting the “chained consumer price index,” as the principal measure of inflation upon which increases in payments to such things as Social Security would be tied. The Chained-CPI is [...]

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 [...]

misLeading Indicator suggests world exporting to aliens

When I do calculations on a performance indicator, I usually do the calculation more than one way. This gives me a good check on my method, and gives me assurance that the indicator is meaningful if both calculations match. In some cases this task is simplified if there is some constraint that must be met, [...]

The definitions of performance indicators are critical: the case of unemployment.

The US Bureau of Labor statistics calculates inflation several different ways. The mostly widely reported is U-3, and what people generally call the “unemployment rate.” U-6 has a broader definition and includes discouraged workers and those that work part time because they cannot find full time work. In the 1930’s depression many workers were given [...]

Good definitions needed for reliable measurements

The trustworthiness of any measurement depends crucially on the definition of the thing you are measuring. This in turn depends on having adequate background information to define it. Even apparently simple things can be devilish to define: take on-time delivery. What is on-time? What counts as a delivery? Or try absenteeism. Is an employee ‘absent’ [...]

Good luck to G-20 leaders with their early warning indicators

Leaders at the G-20 meeting in Korea last week agreed they will establish early warning indicators of economic imbalances. The G20 communiqué said : “We will strengthen multilateral cooperation to promote external sustainability and pursue the full range of policies conducive to reducing excessive imbalances and maintaining current account imbalances at sustainable levels. Persistently large [...]

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 [...]

misLeading Indicators: How to reliably measure your business

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