A bit of a downer for what would otherwise be good economic news:
Chart from the Mercatus Center at George Mason University.
October 29, 2012
US 3rd quarter GDP number less substantial than it appears
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Polls are less accurate thanks to a 9% response rate (and falling)
Iowahawk has been posting a daily Twitter update reminding people that the reliability of political polls is much lower than ever before:
Your daily reminder: all political polls are still garbage. #9percentresponserate
— David Burge (@iowahawkblog) October 29, 2012
At Macleans, Colby Cosh digs a bit deeper to find out how polling organizations are responding to their approaching-flatline response rate:
The boffins are becoming increasingly reliant on “non-probability samples” like internet panel groups, which give only narrow pictures of biased subsets of the overall population. The good news is that they can take many such pictures and use modern computational techniques to combine them and make pretty decent population inferences. “Obama is at 90 per cent with black voters in Shelbyville; 54 per cent among auto workers; 48 per cent among California epileptics; 62 per cent with people whose surnames start with the letter Z…” Pile up enough subsets of this sort, combined with knowledge of their relative sizes and other characteristics, and you can build models which let you guess at the characteristics of the entire electorate (or, if you’re doing market research, the consumerate).
As a matter of truth in advertising, however, pollsters have concluded that they shouldn’t report the uncertainty of these guesses by using the traditional term “margin of error.” There is an extra layer of inference involved in the new techniques: they offer what one might call a “margin of error, given that the modelling assumptions are correct.” And there’s a philosophical problem, too. The new techniques are founded on what is called a “Bayesian” basis, meaning that sample data must be combined explicitly with a prior state of knowledge to derive both estimates of particular quantities and the uncertainty surrounding them.
[. . .]
Pollsters are trying very hard to appear as transparent and up-front about their methods as they were in the landline era. When it comes to communicating with journalists, who are by and large a gang of rampaging innumerates, I don’t really see much hope for this; polling firms may not want their methods to be some sort of mysterious “black box,” but the nuances of Bayesian multilevel modelling, even to fairly intense stat hobbyists, might as well be buried in about a mile of cognitive concrete. Our best hope is likely to be the advent of meta-analysts like (he said through tightly gritted teeth) Nate Silver, who are watching and evaluating polling agencies according to their past performance. That is, pretty much exactly as if they were “black boxes.” In the meantime, you will want to be on the lookout for that phrase “credibility interval.” As the American Association for Public Opinion Research says, it is, in effect, a “[news] consumer beware” reminder.
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The Dragon returns, bearing cargo
At The Register, Brid-Aine Parnell reports on the mostly successful cargo delivery round-trip by SpaceX’s Dragon capsule:
The reusable cargoship dropped into the ocean yesterday evening around 250 miles off the coast of Mexico after resupplying the ISS and its crew. The Dragon was ferried to a port near Los Angeles where it will be prepped for its return to SpaceX’s test facility in Texas.
Some of the cargo brought back by the capsule is due to be returned to NASA in the next couple of days, including research samples from the station’s microgravity environment. The ship delivered 882 pounds of gear to the ISS, including scientific research and crew supplies. It returned with nearly twice that weight of stuff.
The mission was only a part-success, as the secondary objective was to launch a satellite for Orbcomm, but due to a malfunctioning engine in the launch phase, the satellite could not be placed in the correct orbit and was lost. Orbcomm is sticking with SpaceX for two more satellite launches in spite of this initial failure.
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Who actually benefits from the expansion of “self-service” retail?
In the Wall Street Journal, Joe Queenan meets the modern grocery store checkout:
At the end of my visit to my town’s brand-new supermarket the other day, the cashier said she would be more than happy to help me self-check-out my purchases.
I said, “No, thank you, I would prefer that you do that.” She said, “Actually, we prefer that the customers get into the habit of checking out their groceries.” I said, “Actually, I would prefer to never get into that habit. I would prefer that you handle the entire operation. You are the cashier. You are the vicar of groceries. You, not I, work here. So earn your money and ring up my purchases. And then bag them. Please.”
Are we entering a dark, deeply un-American era when we literally have to do everything for ourselves?
Retailers love the idea of self-checkout and other forms of selling goods to customers with fewer staff members and more volunteer labour donated by the customers themselves. Some customers even prefer this, as it makes them feel more empowered about their retail experience. Bring your own bags (so we don’t need to provide you with bags we have to buy)! Pack your own bags (so we don’t have to hire as many checkout clerks)! But don’t fool yourself that the store is doing it “for the environment” or any other such catchy excuse: they’re on board with ideas like this because it’s more profitable for them.
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Twenty million broken windows
At Forbes, Tim Worstall patiently explains that the damage from Hurricane Sandy (or any major storm) will appear to boost GDP, because it only measures money spent to repair damage, not the costs incurred or the opportunities foregone because of the damage:
We know very well that Hurricane (or Frankenstorm as some are calling it) Sandy will leave a trail of destruction across parts of the US today. There will almost certainly be deaths, as there have been in the hurricane’s passage across the Caribbean. And there will also be a boost to the US economy. Which is really evidence of quite how wrong we are in the way that we measure the economy.
[. . .]
The problem with this is that it is only true because of the way that we calculate GDP. In our working of the numbers we assume that it’s final consumption at market prices: that is, the value that consumers put on everything. However, this is not true of government spending. It’s very difficult indeed to work out what government spending is actually worth: for as we’ve not a choice in it then there’s no market price nor accurate valuation from the people who actually get whatever is produced. Some government spending is most certainly worth more than the actual amount spent. The court system say: a pre-requisite of our having a complex society at all. Other parts not so much: what is the true value of a diversity adviser for example? So what we actually do is value all government spending, for GDP purposes, at the cost of that actual spending. Government spends $100, GDP goes up by $100. That’s just how we define it. This can cause amusement in measuring the success of welfare programs for example. Even Census admits that some of the people who receive Medicaid, or food stamps, value what they receive at less than the cost of providing it.
[. . .]
Now imagine that Hurricane Sandy does $10 billion of damage to that wealth (for our purposes it doesn’t matter whether it’s $100 billion or $1 trillion. Although this obviously matters to everyone except for the purposes of this example). The US is now worth $99.990 Trillion. GDP might rise to $15.1 trillion as we repair that damage. But we’re not in fact any richer at all: despite the fact that GDP has gone up. What has actually happened is that some of our stock of wealth has been destroyed and we’re having to do more work in order to rebuild it. This is exactly the same as our pollution example. We’re measuring what we produce but not the capital stock of what we have (or had).
Yes, the rebound from Sandy may well provide a boost to the economy. But that’s a function of the way that we measure that economy, not a real boost in our general wealth.
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