Tuesday, April 10, 2012

Truth, Falsity, and Jobless Numbers

I recently came across a web page with the following claim:
Given the difficulty of estimating economic data it is common practice for government agencies to announce a preliminary number subject to later revision. Under the law of averages, estimates should balance out between being higher or lower than later revisions. Amazingly, though, the Obama Department of Labor’s preliminary estimates of new jobless claims have been lower than later revisions in 56 of the last 57 weeks.  
The claim was followed by what purported to be a quote from Labor Secretary Hilda Solis. 
"We feel it is better to err on the side of optimism,” she said. “The preliminary estimate is widely reported. The subsequent revisions are rarely noticed. By adding a bit of sheen to the preliminary estimate we feel we are helping to boost morale. We believe that good morale is an important building block for positive change.”“Making the economy look better will make people feel better,” Solis went on. “If people feel better they are more likely to support the policies of the Administration, which we feel is crucial if we are to be given the opportunity to continue on the path laid out by the President for another four years."
My immediate reaction was suspicion—the quote sounded too much like what a critic of the President would imagine his labor secretary saying and quite unlike what an administration official would actually say. I put a comment on the web page to that effect, adding that I didn't have an opinion on whether the initial fact was true.

Further investigation found the quote only on pages hostile to the administration, and no source other than another such page. On the other hand, the fact, initial underestimates for 56 of the past 57 weeks, is from the Wall Street Journal and so presumably true.

I conclude that the labor department has indeed been deliberately misrepresenting the evidence—erring in the same direction 56 times out of 57 is not something that has any significant probability of happening by chance. The obvious explanation is  the one given in the purported quote. But I am quite confident that the labor secretary didn't actually say what the quote asserts she said, at least not in public.

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P.S. A commenter points out that the "quote" from the labor secretary actually originated as part of a longer piece, obviously intended as satire.

Pretty good satire, too.

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