Wednesday, December 29, 2010

Data Dictators No More

Economists have gotten in the business of leveraging data scarcity to their advantage. Traditionally, one common way to become a successful economist was to carve out a little data fiefdom using one's social and academic connections. By having early access to a useful trove of data, one could be the first researcher - perhaps the only one - to make extrapolations based on that unique data-set. This had two big advantages. First, it created a sense of scarcity. If you were the only economist able to evaluate a certain data-set, your research could be quite unique and, hence, valuable. Second, it limited the potential for others to criticize your work. Sure, journal articles were/are peer-reviewed, but, at least in the short-term, only a handful of other researchers had the information necessary to rigorously evaluate your findings.

No more. As 2010 comes to a close, the world is absolutely bursting with data. Massive data sets, free data sets, unique data sets - vast amounts of information collected just because our technology makes it so easy, and because we have a veritable army of NGO's collecting data for public use. How are economists responding to this? With reluctance and reticence. Open, widely available data are a scary thing for many economists. It means that anyone can evaluate methods and findings. Indeed, it means hundreds, even thousands, likely will do so. One of my economics professors used to say, typically with a malicious chuckle "Jacob, torture the data enough and they will tell you anything." Well, torture the data these days and you are more likely to be exposed for your crimes.

Yet, it's not just about where a data set comes from or how the data are evaluated. The principle failing of economists has been their total inability to effectively portray and communicate the data they analyze to the public. Economists still use two-dimensional, static diagrams with frightening regularity. Why? Because that's what Milton Friedman or John Maynard Keynes used? Sure, simple illustrations are often useful, but what about visually rich and engaging graphics? Important insights are too often lost because economists stubbornly feel that it is their job to analyze, not to communicate. What hogwash.

Hans Rosling is surely the current king of efforts to make data exciting. He has used novel techniques and software to communicate information highly relevant for anyone interested in international development and health. Why aren't economists following his lead? Why are economists stuck on holding scared only the stodgy? An important question, and one that I struggle to answer. A big part of the answer probably comes down to training. Economists are trained to be mathematicians and analysts - not data presenters. This is unfortunate. Alan Greenspan, among other well-known economists, has publicly lamented that he feels timely, accurate data are far more useful - even without sophisticated extrapolation - models based on old data.

Another reason economists fail to present data in interesting or effective ways is probably because economists are strangers to the world of the real. The entire profession is highly divorced from reality. The models with which economists tinker are often not meant to have any bearing upon what is real. They are often merely mathematical extractions used to explain other mathematical extractions. Reality is derided as a frustrating break from the beauty of mathematical continuity. Math is so clean. Reality, so messy. You can't make clean forecasts with messy data from the real world. Better to make forecasts based primarily on assumptions of what the model says the data ought to look like - that will produce a neater result.

So, where does this leave us? I don't rightly know. But, in an interconnected world where think tanks and universities increasingly communicate directly with the public, rather than via mass media, it seems of the highest importance for researchers to be able to represent their findings in visually compelling/graphically appealing ways. Otherwise, all that research might be pointless.


  1. Hans Rosling is amazing. Thanks for including that video as part of your post. If only I could make my research 1/2 as "neat"!

  2. Awesome! Glad you enjoyed it. He "cleans" his numbers a bit with different techniques, uses logs and such, to make the narrative more captivating. Still, real data, real information, really effective.