Keith's Journal

The Future Of Climate Alarmism Is Bogus Statistics

Dr David Evans and Joanne Nova

The temptation is all too strong. How many bureaucrats would work just as hard to show that their department was less important, less necessary, and less deserving of funding? It’s the fatal trap of socialist management. The incentives are wrong.

When governments are faced with poor reports, but they write their own report cards, they have many options to upgrade their “score”. It’s insane to think that people might not take every opportunity they can to improve their mark. They are human.

Big problems like inflation, unemployment, national growth, or global temperatures can be “improved” two ways –one way takes tough decisions and years of work, and the other way takes a quiet statistical summit, a white paper and an in-house training weekend. It’s easier to “solve” big problems by changing the way you measure them. By changing definitions, methods of interpreting the data, or through sheer statistical chicanery it’s possible to issue press releases with the words “improvement”, “better than expected” or at least “figures have plateaued”.

For example, the inflation of the 1970s was partly “cured” by defining inflation as the consumer price index (CPI), then changing the way that CPI is measured in ways that lower the CPI. Today, the US CPI is about 3 percentage points lower than it would be if the method of 1980 was used. Another example is unemployment, where governments continually refine what counts as “unemployed” so as to lower the unemployment number.

There doesn’t need to be a conspiracy. There is constant pressure and rewards in one direction and very little incentive to “find” or “discover” errors that increase the CPI. It’s a ratchet effect. Dozens of incremental changes slowly ratchet the CPI figure endlessly downwards.

It’s hard to measure prices. There is a lot of room for tweaking. You’d think arithmetic addition would be enough, but apparently it’s better to do it geometrically. Did you know? It doesn’t work like that for us at the checkout. And the quality of goods is improving, true, but how do you compare a modern personal computer with one from 1990? Someone has to decide just how much better the new computer is. That’s open to interpretation, and that interpretation affects welfare payments. Seriously, if someone decides a modern PC is worth, say, ten old ones, then their price effectively “falls” tenfold; the CPI “falls”, and so do future social security cheques. It’s sophisticated theft.