Rapid Responses

GDP manipulation

[Re: Time for MPs to summon statisticians over endless revisions, Friday]

This article misses the point. The problem is not with statisticians, but with politicians and the media (and through them, the markets). They all give disproportionate attention to GDP figures which are, inevitably, far from a precise reflection of what is really going on in the economy. In fact, decimal places should basically be ignored. They give the impression of a higher degree of accuracy than can be reasonably – and meaningfully – achieved in practice. In addition, and perhaps even more important, GDP is essentially a quantity measure. It says nothing about quality, and therefore the nature of the activities that are actually producing the changes. For example, expenditure on greater security measures increases GDP, whereas energy conservation measures reduce it. Also, one of the most significant contributors to GDP growth over the past decade has been the finance and banking sector. Significant staff reductions in this area, over the past couple of years, have contributed to a decline in GDP, despite the trend probably being in the UK’s long term interests. The issue here doesn’t really concern statisticians or the statistics themselves. It has far more to do with the way media commentators, and politicians with vested interests, attempt to misrepresent the data to suit their preconceived prejudices.

Dr Bruce Lloyd, emeritus professor of strategic management, London South Bank University.

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