Common Misconceptions About Government Statistics
July 22nd, 2008 · No Comments · Subscribe to this feed
Misconception: The CPI does not include food or energy prices.
Yes it does. There are many different CPI indices used for different purposes. There is one, the CPI Core index, that excludes food, energy, and other volatile products to make it easier to see short-term inflation trends, but this is by no means the only or even primary CPI index. People often get the idea that the Core Inflation index is the “official” or only inflation index due to its common citation in the media and Federal Reserve, but nothing could be further from the truth. The broadest and most widely-used CPI index, the CPI-U, includes both food and energy prices.
Misconception: Official Unemployment numbers are artificially low because they only count those who apply for unemployment benefits. When benefits run out, those people are no longer counted.
Unemployment number may very well be artificially low (the birth-death model isn’t exactly a model of precision), but it’s not because the BLS only counts those collecting unemployment benefits. This misconception is so widespread, the BLS actually addresses it specifically in its FAQ on how the government measures unemployment:
“…Some people think that to get these figures on unemployment the Government uses the number of persons filing claims for unemployment insurance (UI) benefits under State or Federal Government programs…”
They go on to explain how the number is actually produced, saying
“Because unemployment insurance records relate only to persons who have applied for such benefits, and since it is impractical to actually count every unemployed person each month, the Government conducts a monthly sample survey called the Current Population Survey (CPS) to measure the extent of unemployment in the country.”
Misconception: Social Security will run out of money in 2017/2040/whatever
Well, maybe, but it’s not extremely likely. According to The Atlantic Online
“Actually, Social Security projections are based on extremely pessimistic economic assumptions: that growth will average just 1.8 percent over the next twenty years, a lower rate than in any comparable period in U.S. history…These projections are genuinely a worst-case scenario.”
While I personally agree that social security should be reformed, I don’t think the situation is as dire as you hear in the media. It’s their job to stir the pot and create news, not tell you everything will be ok.