June 6, 2003
Back to School for the Business Media
An interesting new course offering has shown up in the Ball State catalog -- the product of collaboration between Journalism and Economics. It’s called "Statistics for the Media," and if the caliber of reporting on economic issues is any guide, its arrival has come not a moment too soon. As arguments over economic policy routinely pit one advocate's statistics and projections against another's, the business media has too often failed to police the debate and flag the distortions that are inevitably served up by those in the arena.
Whether this is something that journalists and media companies are able, or willing, to correct remains to be seen. Certainly we don't expect reporters and broadcasters to be experts in all subjects they write or talk about. But we can, and should, expect them to check their facts, and to maintain an independent, critical viewpoint on rhetoric and data served up by those who use them to sway public opinion. And in the increasingly quantifiable world that we live and work in, that requires a correspondingly higher level of sophistication and comfort with statistics.
Those who routinely mouth the phase, "second largest tax cut in history" to describe the recently enacted Bush stimulus plan, for example, should not be given a passing grade. That's because that simple sound bite distorts the actual event in at least three different ways.
The biggest distortion stems from the fact that the economy of today is so much larger than the economy that existed during previous tax cuts as to render this dollar vs. dollar comparison meaningless. The value of what we produce and earn today, economy-wide, is nearly twice as large as what existed during the Reagan tax cut legislation. Is it any wonder that cutting back rates produces a big pile of money?
This illustrates what is perhaps the biggest single failing of economic reporting, namely, the inability to recognize trends. In an environment where the direction of change is constantly upward, it makes no sense to single out "records," yet we persist in ranking and scoring ourselves nonetheless.
But there's more than that involved here. There is inflation to consider. Even with prices rising more slowly in recent years, over any span of time the cumulative effect of inflation on purchasing power cannot be overlooked when making a historical comparison. After all, if you forget about inflation, then the economy isn't twice as big today as in the Reagan years -- its three and a half times the size.
These are simple problems to correct. And, truth be told, most print media sources go a lot further today in getting it right than their counterparts in broadcasting. That's faint praise, of course, but it's something to build on.
But a third issue with economic statistics, or data in general, for that matter, is a harder nut to crack. In a world where we are all so specialized, we tend to accept the summary information we get from our "experts" as definitive. But the variety of ways in which even solid, hard information can be conveyed can make this "bottom line" move by a surprising amount.
After all, how many of us tell our spouses that our $1,000 raise is really a $10,000 raise? That is, after all, what you would get if you added it up for the next ten years. And that's precisely what the Congressional Budget Office produces -- and media outlets echo -- to keep score of tax cuts.
Sometimes that's harmless, but too often it is not. How can we expect those with only generalized knowledge to know the difference? That's a challenge we should expect our eyes and ears in the media to squarely address.
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