On the inaccuracies of macroeconomic observations

Abstract

Transparency about measurement errors in macroeconomic statistics is lacking. Inaccuracy is usually acknowledged only during extraordinary situations or under specific policy demands. Despite advances in technology and methodology, the overall accuracy has not improved due to economic changes and new complex activities. Even striking historical efforts did not change the persistence of substantial inaccuracies and biases. While the pioneers of national accounting addressed inaccuracies by using multiple accounting approaches and transparently reported error estimates, current statistical offices and other data producers rarely publish error measures, thereby creating an illusion of precision. Best practices and new measurement methods, such as satellite observation, Big Data, and Artificial Intelligence, promise improvements but face significant challenges without clear standards and an awareness of measurement error and bias. Regular and transparent reporting of measurement errors is and will be essential to improve the data reliability. Empowering data users—funding agencies, academics, and journalists—through error reporting and education can challenge the status quo.

Keywords

• measurement error
• gross planetary product
• national accounting
• international monetary fund
• empowerment
• education