Reporting Numbers Truthfully

April 7, 2012
Posted by Jay Livingston

We have a hard time understanding or accepting indeterminacy.  We want our economic reports to have the same finality as sports scores.  The Rays beat the Yanks yesterday 7-6, and Carlos Peña’s grand slam and ninth-inning single had a lot to do with that outcome.  We want the same kind of precision of results and explanations in economic news – for example, yesterday’s jobs report – so  that’s  what the media give us.

Here, for example, is what CNN Money said.

March jobs report: Hiring slows, Unemployment falls

April 6, 2012: 2:47 PM ET

American employers hired 120,000 workers in March -- half of the job gains seen in February.

American employers hired 120,000 workers in March -- half of the job gains seen in February.
NEW YORK (CNNMoney) -- Hiring slowed dramatically in March, clouding optimism about the strength of the recovery.

Employers added 120,000 jobs in the month, the Labor Department reported Friday, falling far short of economists' expectations.

Meanwhile, the unemployment rate fell to 8.2% as the labor force shrank by 164,000 workers, mostly due to white women leaving the job market.
Economists attributed part of the hiring slowdown to an unseasonably warm winter that boosted job growth in January and February [blah, blah, blah . . . ]

 But economic numbers are sports scores.  R.A. at The Economist* rewrites the story:
  There is a 90% chance that employment rose by between 20,000 and 220,000 jobs. The change in the number of unemployed from February to March was probably between (roughly) -400,000 and 150,000, and there's a good chance that the unemployment rate is between 8.1% and 8.5%. Reported changes for important subsectors are too small relative to the margin of error to be worth discussing. In all probability, the employment growth has remained close to the recent trend of a 200,000 jobs per month increase.
*The Economist, for some reason, insists on initials rather than names in its by-lines.

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