Professor Peter van Bergeijk from the International Institute of Social Studies (ISS) has recently published a thought-provoking book titled On the Inaccuracies of Economic Observations’ (Edward Elgar Publishing). In this book, van Bergeijk tackles the persistent inaccuracies in economic statistics, highlighting their global impact on economic analysis.
The book delves into the common measurement errors found in GDP, inflation, trade and employment analysis. Through compelling case studies from both developed and developing countries, van Bergeijk demonstrates how these errors have distorted economic assessments over time and undermined the scientific rigor of economic analysis. He provides best practices for evaluating statistical errors and tools for identifying inaccuracies, improving evidence-based analysis and decision-making.
This essential read is aimed at students of economics, data science, and research, as well as policy analysts and data producers. It offers valuable insights into data reliability and practical strategies for problem-solving.
The inspiration behind the book
Van Bergeijk’s interest in economic data accuracy began as a master’s student at Erasmus University Rotterdam and a junior country risk analyst. He noticed that economic statistics, even from developed nations, often displayed conflicting data and unstable numbers, affecting country risk assessments.
This led him to explore the concept of measurement error, initially inspired by Oskar Morgenstern’s ‘On the Accuracy of Economic Observations’ (1965) and later by Morten Jerven’s ‘Poor Numbers’ (2013). His fascination grew as he encountered more inconsistencies and anomalies in economic data.
In economic analysis, precision and accuracy have long been revered. Precision ensures a high level of detail, while accuracy guarantees the absence of errors. However, measurement errors are often overlooked and, at worst, underreported in economic data analysis.
Rather than viewing these discrepancies as hindrances, van Bergeijk embraced them as opportunities for exploration. He began studying measurement error, arguing for its importance in economic discourse.
Championing transparency in economic analysis
Van Bergeijk’s book aims to dispel the myth of perfect economic data accuracy and advocates for greater transparency. He highlights pervasive measurement errors and challenges economists to acknowledge these imperfections. The book introduces a scale for assessing and reporting data accuracy, helping users navigate the complexities of economic statistics.
These findings have significant implications for policymaking and research practices. Policymakers are urged to recognize the uncertainties in economic data, while researchers are prompted to adopt data sensitivity analyses and replication studies.
For van Bergeijk, transparency is a key cornerstone to addressing measurement error. He posits that data imperfection and prioritizing transparency are essential for robust research, informed policymaking, and a clearer grasp of the complex dynamics shaping our world. ‘By empowering data users to crowdsource error reporting, we can collectively strive towards a more accurate understanding of economic phenomena.’
Professor van Bergeijk’s book is available for purchase in hardback and digital formats via Edward Elgar Publishing. The first chapter is available to read for free. You can register to hear more ideas from the book during his valedictory lecture on Tuesday, 1 October 2024 (16:00-18:00 CET).
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