How to tell if you are an economist...

I have been putting a lot of thought of this - personal and participant observation reveals the following worrying signs of being an economist:

• You have had several pens in your shirt pocket for several hours, and have even gone to a meeting with them in. You have only just noticed this in the mirror in the bogs.
• You can't find a good quality retractable pencil these days...
• You start to think that the magazine "The Economist" is far too journalistic and strays away from the facts way too much.
• You start reading economics books, no matter how interesting and easy going, at bedtime.
• You know more about the methods of economic forecasting than the mouthpiece the consultants have put on stage for the presentation... you smile wanly to yourself that you can see through their bullshit
• You have heard of "Richard Florida" but you absolutely regret having ever heard of him!
• Other colleagues in your workplace cite Richard Florida. You feel like shooting them.
• You roll your eyes when you see the case study for a successful comparator economic region is... Baden Wurttemburg/Emilia Romagna/Baltimore...
• You research mortgage rates in depth and design a spreadsheet on which to calculate various things. You try and recreate the payment streams and how they calculate APR. You build in scenarios of where interest rates may be going! this takes days and days and weeks. The wife is annoyed you haven't even got round to applying for a mortgage yet.
• You lose your temper that the figures in the report you are reading are 'unrounded'! a sign of a lack of professionalism...!
• You schedule a Christmas Day's dinner and guests using a spreadsheet!

The Golden Rules of Forecasting

I am trying to develop some 'golden rules' for using economic forecasts in local and regional economic development and analysis....

looking into the future - the golden rules:

1. Forecasts should be used as part of a process of trying to understand the future – they provide only a partial insight into the economy
2. Any judgements about the future are not facts waiting to happen – there is a chance that they won’t come true
3. Any judgements about the future are based on current information – and this information can be out of date, inaccurate or wrong
4. The forecasts you use should be based on the most accurate (thanks dearieme) and up-to-date information available
5. It is strongly recommended that forecasts do not lead policy response
6. For any forecast it is correct to focus on broad movements and changes rather than on precise numbers
7. The user should recognise that all projections are subject to error
8. Forecasts cannot predict shocks or sudden events
9. Forecasts should be read with a critical eye – they are usually based on modelling techniques and can overlook the specific uniqueness of local characteristics
10. Finally, forecasts should never be used as the sole input into planning or decision-making

Who is the bigger fool!? I would say that the bigger fool is the person who places forecasts as the most influential factor in their decision making. The lesser fool is the person who provides the forecasts and pretends that they can either accurately predict the future or can predict it more accurately than anyone else.

Fun Friday

I decided to lighten up a bit this afternoon. This was partly brought on by a discussion with a former colleague yesterday when we were reminiscing on the phone about a former boss of ours who was the David Brent of the economic development world and bore a close physical resemblence.

There were several amusing episodes of note:

• One year he took all the staff performance budget and gave it all to his number one stooge in a big bonus, salary hike and company car
• He didn't give a colleague any work to do for 3 months because he didn't hire him and didn't want anything to do with him. Meanwhile the rest of the team were working until 7pm most weekdays!
• He managed to take over entire departments in the space of months at one stage! but really did bugger all.
• He let another whole department write tenders! none of the tender writers had ever been consultants!

It really was a mad place to work. It was reputed at the time to be one of the top local or regional development organisations. On balance, in some things it was actually very good, in others it was dire but overall it was schizophrenic ... more tales...

• it restructured itself on paper 2 times in 6 months
• it went public and exposed itself to a potential £10 million profiteering asset stripper all to get the glamorous tag of 'plc'
• the nice colour template and layout we invented for our reports was, on orders of the Chief Executive, scrapped to be replaced by a very basic Times New Roman 12 pt format invented by a secretary whose husband was a golfing partner of said Chief Exec

...I left after 6 months! I was posted in the economic consultancy department and found I was the only person there who could actually do economic research! I can still laugh about it though!

Economist letter latest

They didn't publish it did they!? Maybe I upset them too much by calling them a bunch of journalists rather than economists.

Some of their (The Economist) stuff is interesting, but too much I have been reading in the past year has been a partial analysis of economic events and issues, a handful of items have just been preposterous in terms of the seriousness with which I could take them.

Ah well I would like to tell you that I am busy working on a diatribe of pointing out the Economists mistakes but basically I can't be arsed.

A diatribe about 'sloppyness'

Ah I am getting wound up by the sloppiness of some folks - whether they be consultants, academics or working in the same organisation. The more I work in the trade of 'economists' the more I see some builders out there who forgot to paint the skirting boards so to speak.

When I were a lad - I had my work scrutinised to the nth degree. As a junior consultant I was lucky to work for an organisation where all final reports had to be checked by a Director, where they were very reluctant for junior staff to actually write final reports. By the time you were allowed to go to town on a report, you had a fairly good idea of how to do it and that it must be to a high standard of detail and robustness.

And before that in postgrad I had a fairly pedantic supervisor who had an eye for detail.

And then I worked in the public sector where all our work was peer-reviewed and the boss had the final say and had very high quality standards.

Its this eye for detail that seems to be lacking. That and being sensible in having your work or report proof read by a peer. Oh and not being offended at having to change things.

Its hard to admit to mistakes but everyone makes them. No-one on their own can author a faultless piece of work or analysis.

I have seen a number of recent outputs from various folks. Some are a blessing and are well analysed, and the detail behind them has been carefully put together.

Others - I have been shocked by the sloppiness. The number of ambiguities or things that don't add up, badly written, make pretty unsubstantiated claims... the list goes on. I am stereotyping a bit.

I just wanted to rant and get that off my chest!

Site news

Ah due to gross incompetence on the author's part I have deleted most of the other content except the Economist letter. Back soon.

Economist Magazine Rubbish

I used to like the Economist. It is starting to get right on my t*ts now though. They seem to be getting more and more journalistic.

For example, in the latest edition they have spouted a bit about public expenditure as a proportion of GDP in 2004/05 and concluded that Southerners were so p*ss*d off they don't get enough of this as a slice of GDP they generate that they voted Tory. Well b*ll*cks. Bad analysis. They produced a graph ranking public expenditure as a proportion of GDP and the northerners get the lions share as it seems BUT!

In a letter to the Economist (will it get published??)...

In the 'Big Divide Widens' you have a very one dimensional analysis of the reasons why southern Englanders voted against the government. Very poor I thought.

The analysis behind this is misleading and poor for several reasons:

• It is better to look at public expenditure per capita perhaps? this evens out imbalances nicely - London is actually in the top three for this using 2002/03 data from the Treasury and ONS.
• The South East economy generates much higher GDP than the north - public expenditure as a proportion of GDP might be smaller as a result of this. It might not but you need to analyse the figures for this to be certain. Which you didn't do.
• GDP is a bit of a meaningless measure of individual wealth, as is public expenditure a measure of the cost burden and benefits on individuals. There are far better measures for all of these. Please try harder next time Economist.
• There is no official data for 2004/05 GDP or public expenditure. Instead the numbers come CEBR so I assume they are an estimate.
  

All in all, the Economist is moving ever more towards journalism and away from economics and decent analysis of issues. You guys create nice headlines, but it would be good to see some honest, robust analysis in there.