Tuesday, January 24, 2017

Six Degrees of Unemployment

The faces that make up the numbers

As reported by Allan Smith of Business Insider, White House press secretary Sean Spicer said:
... that President Donald Trump "sees people that are hurting," and that "it's not just a number" to him. He said the president is "not focused on statistics," but "if people are doing better off."
And while these quotes make for a policy jumble, there is a kernel of sensibility in there.

When I was a young economist (boy, that was a long time ago), I worked with a group of civil and mechanical engineers. I was given a set of fragmented demographic data and was told, "Just graph it." Uh, yeah.

Moving from academic economics to the real world can be confusing: tidy graphs don't always align with physical observations. And while it's usually thought of a tool for marketing, I found a useful foil in focus groups. Focus groups – like telephone and mail-in surveys – are often used the wrong way: just because 6 out of 10 self-selected focus group participants who have the time and motivation to join in a midday session agree on something doesn't mean that 60 percent of the population does.

The Bureau of Labor Statistics is one of the best and most respected collector of data in the world. Its disinterested eye looks at the big picture of employment and six measures of "labor underutilization" to present an overview of who's working and who's not.

Anecdotes don't add up, statistics don't tell individual stories, and politicians will use whatever ploy confirms their tale. It's good that the president "sees that people are hurting": that's human and empathetic. And I think it's important for policymakers and economists to get out from under the big numbers and data sets to see the world at the individual level (here, here, and here).

We're a nation of individuals: my story can't be seen or known from a penthouse suite or heavily guarded mansion. So be aware and empathize. But my problems don't amount to a hill of beans in this crazy world. Take care of the crazy and let me find my place in the world.