Skip to comments.How is Something Saved Measured?
Posted on 01/28/2010 9:53:35 AM PST by MosesKnows
What data allows the Obama administration to give us the number of jobs saved because of some action on his part? In simple terms, how do they know, how do they measure it?
Thomas Sowell offers some insight:
Econometrics is tricky and unless you are scrupulously intellectually honest (which no politician can afford to be) and decide on meaningful metrics and methods of assessment prior to the “experiment” (and all economic policy decisions are macroexperiments) you cannot arrive at an unambiguous answer.
An unambiguous answer is not possible, btw, even in principle, because we can only control one or two of the variables (determinants), while in the real world there are dozens of confounding factors.
The only thing we can ever know is the rough sensitivity of the labor market to certain policies, like the stimulus. I suspect a lot of the claimed jobs created or saved are not the results of measurements ( a posteri) but assumptions based on a priori models.
Some of the “jobs saved” are certainly state employees, since a lot of the stimulus was used to fill budget gaps in mostly Democratic leaning states, the ones with the worst budget problems. This is probably poor public policy since it prevents state governments from coming to grips with economic reality for another year and makes the citizens of less favored (Republican leaning) states subsidize the favored states.
This question comes up in Medicine all the time. Stated otherwise... “How do you know an intervention works?” It also is a major gray area where the Charlatans and Hypesters work. In order to answer the question truthfully, you MUST know with certainty what would happen without the intervention, i.e. the “Natural History” of the process. In Medicine we know from a long history of experience that if you don’t take out an inflamed appendix, it will probably burst and the patient will die. Note I said “probably”... most of this works on statistics and there rarely is a black and white alternative... just a probability of occurrence. The huckster will seize upon this statistical uncertainty to make it appear that if there is even a remote chance (low probability) of something happening then it WILL happen. If that occurrence happens to be frightening, so much the better! They work off fears and mass hysteria!
In the area of economics, things get quite a bit more hazy than they are in medicine! Projections of how bad the jobs picture WOULD have been are more fiction than science, In My Humble Opinion! A good question for him and his team is “How do you KNOW how many jobs would have been lost and why didn’t you tell us that back when you were touting your Stimulus Bill?”
This uncertainty gives the hucksters and snake-oil salesmen (politicians) LOTS of wiggle-room. If you step back and examine Obummer’s message it is all about how he has “saved” you and your possessions. To hear him it could have been a whole lot worse if he hadn’t been there. What I don’t hear is a lot of evidence that he knows what the “Natural History” of the recession and unemployment are about. Like most talented politicians, he is assuming the mantle of “savior” when all he has done is happen to be present when thing took their natural course. I imagine that if he donned a mask and danced around waving a dead chicken, things would have been about the same!
The Democrats used to accuse Reagan of “Voodoo Economics”... have you heard that term lately??
I would have postulated that the jobs "saved" are union jobs -- easy enough to count.
Your question answers itself. There may never have been a time in the life of obama that his words were not mere smoke and mirrors. Even if he says something that is true, he does it to cover a larger untruth.
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