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Modi's India
Another Asian Giant With Inflated GDP Stats?

The most recent Nobel Prize winner for economics, Princeton’s Angus Deaton, says that India’s official growth figures may not be as accurate as many might assume:

“The national accounts are showing, you know, a huge increase in the amount that people have, year, upon year, upon year, and we’re just not picking it up in the household surveys,” Mr. Deaton said. That’s “a very, very serious gap and I think not enough is being done to address that,” he said.

Mr. Deaton, a professor at Princeton, said the differences raise doubts about the accuracy of growth numbers. “I’m sure some of that growth is exaggerated,” Mr. Deaton said. “I’ve no idea how much, it might be just a point or two. It might be a lot more than that.”

“One of the things you worry about with statistics is that growth is so much a flag under which recent Indian governments have flown,” Mr. Deaton said. “They are very much tied to that measure of success. That makes it very difficult for accurate data-keeping.”

Even if there isn’t an attempt to bump up the numbers for political reasons, measuring economic activity in a country as big, and as diverse as India, with levels of development ranging from world class software firms to indentured slave laborers making bricks out of mud, is a task that, realistically speaking, is probably beyond the capacity of the Indian government—or indeed of any government on the planet.

And furthermore, none of this means that official figures are worthless. As with China’s unreliable books, there are still useful things that can be discerned from by looking at them. But it’s all too easy to forget, as we look at a table of nice crisp statistics, that reality is usually much more complicated than the paperwork says it is.

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  • Tom

    The map is not the territory.
    The file is not the man.

    –Kevin Usher, “From the Highlands”

  • Jim__L

    See also: America’s inflation figures since, oh, Clinton’s time.

  • Jim__L

    Look what google returns using the search string, “any metric you use to measure economics becomes useless as a metric”…

    https://en.wikipedia.org/wiki/Goodhart's_law

    More concisely stated, “When a measure becomes a target, it ceases to be a good measure.” or originally, “As soon as the government attempts to regulate any particular set of
    financial assets, these become unreliable as indicators of economic
    trends.”

    … which is why people resort to things like the Cheeseburger Index, I suppose. Too much hangs on GDP numbers to counteract the temptations of governments to meddle, or just out-and-out lie.

    (It’s somewhat alarming that Google can come up with exactly what I want, top of the list, based on such a half-remembered string. It’s beyond returning “In First Looking into Chapman’s Homer” from the search “wild surmise” embedded in a bunch of nonsense. My conversation would be much snappier if I could consult such a tool sotto voce.)

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