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Wednesday, April 22, 1998 Published at 00:02 GMT 01:02 UK


oldBusiness

Q&A: Lies, damn lies, and statistics



Thanks to a new definition of "unemployed", almost 500,000 people will join the ranks of the jobless. Is this possible? Throughout history, people have mistrusted statistics. The new unemployment figures illustrate why. With the help of BBC Economics Correspondent Jonty Bloom and a few famous faces, BBC News online discovers if the new figures are more than just political spin.


[ image: <B><FONT SIZE=2>Statistics show every two minutes another statistic is created</B><BR>--Anon]
Statistics show every two minutes another statistic is created
--Anon
Are the new unemployment figures just another unneeded statistic?
The new figures aren't really new. The government has always collected them but now they will be issued monthly instead of four times a year. The new number will include anyone that is actively available to start work within the next two weeks and has looked for work in the last four weeks or already found a job but waiting to start. The previous figures counted only those out of work and claiming unemployment benefit. By using this definition of "unemployed", the figures should show that unemployment is much higher than the normal monthly figures indicate - as much as half a million higher.


[ image: <B><FONT SIZE=2>Lies, damn lies and statistics</B><BR>--Benjamin Disraeli]
Lies, damn lies and statistics
--Benjamin Disraeli
But if the government can suddenly change the way unemployment is calculated, doesn't that prove that the figures are meaningless?
The new figures are far from meaningless. They give the government a much better idea of how the economy is performing than the old claimant count. Since major economic decisions such as whether to increase interest rates or cut them are based on statistics, we had better hope that they are not lies, damn lies, but accurate.


[ image: <B><FONT SIZE=2>The basis of optimism is sheer terror</B><BR>-Oscar Wilde]
The basis of optimism is sheer terror
-Oscar Wilde
Shouldn't Labour be worried that it has added 500,000 new people to the unemployment list?
The Labour Party spent most of its 18 years in opposition criticising the previous government's record on unemployment and the way that the figure was calculated. They alleged that the "claimant count" (only those on benefit) underestimated the "real" level of unemployment. By emphasising this higher level of unemployment, the government is making a political point - that joblessness under the Conservatives was higher than claimed at the time. Doubtless the Conservative opposition will now use these figures to attack Labour's economic record.


[ image: <B><FONT SIZE=2>Behind every successful man stands a woman waiting for his job</B><BR>--Anon]
Behind every successful man stands a woman waiting for his job
--Anon
Is it true that most of the people added to the list are housewives?
Yes. One of the largest group of people excluded from the claimant count are housewives who are looking who are looking for a job but whose husbands are in work. Since such women are not entitled to unemployment benefit, they aren't counted. But the new figures will include such women and several other groups, such as school leavers.


[ image: <B><FONT SIZE=2>First get the facts, then you can distort 'em as much as you want</B><BR>--Mark Twain]
First get the facts, then you can distort 'em as much as you want
--Mark Twain
Are the new figures just more spin? What is the benefit in changing the way unemployment is calculated?
The benefit for the government (and everyone else) is that by concentrating on a more accurate indicator of unemployment, it will be able to make better economic decisions. For instance, the claimant count currently stands at 1.4m; the new figures will be nearer 1.8m. Clearly if you put different figures into economic equations, you get different answers.

Think you've got it? Never forget the old adage: If you ask two economists the same question, you're bound to get at least three different answers.



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