The risks of imprecision

When being half-right can be worse than being wrong.

Chris Dillow has a nice post up, "in praise of imprecision". He argues that, in far too many situations, we argue over tiny differences in estimates when the overall answer is basically known. What's GDP growth for last year? It's basically flat. Yet for all the arguments, you would think that the difference between -0.3 and -0.1 per cent – or even between -0.1 and 0.1 – was the difference between life and death.

He illustrates this with a few neat little guesstimates. For instance:

How much does welfare scrounging cost the economy? Guesstimate the number of scroungers. Guesstimate the value-added they'd contribute if they were working. Express as a proportion of GDP. For plausible values, it's a small number.

Or:

What impact will the small uprating in the minimum wage have on jobs? The adult rate will rise by 1.9%. Economists forecast inflation this year of 2.5%, so this is roughly a 0.6% real fall. Let's call the price-elasticity of demand for labour 1.5. The Low Pay Commission estimates (pdf) that 5.3% of jobs are around minimum wage ones. Multiply these three numbers together and we get 0.048%. Multiply by the number of jobs in the economy (29.73m) and we have roughly 14,000.That's roughly one-eleventh of the sampling variability of employment figures.

It's worth pointing out that the same idea has been applied pretty consistently to the claim that families with three generations of worklessness are a public policy problem. We don't know how many there are – and nor does the government, we now know – but study after study has suggested that the number is tiny.

There are only 15,000 households with two generations which have never worked, and a third of them are because the younger generation left full time education within the last year. On top of that, less than 1 per cent of young people have never worked by the age of 29, so the younger generation is normally the one most likely to pull a family out of worklessness. Whatever the number is, in other words, it's really, really small.

But it's important to note the downside to imprecision. The way common knowledge is disproved is rarely through wholesale upheaval. Instead, it's a gradual process of refinement: new estimates are put out, slightly lower than the old ones; then lower estimates still; and they get steadily lower, until suddenly you realise that the conventional wisdom was wrong.

It's a lot harder to turn an estimate of "recession" into an estimate of "growth" through gradual refinement than it is to turn an estimate of "-0.3 per cent" into one of "0.5 per cent". So there's more of a danger that we'll be stuck with half-truths.

But with that danger in mind, the absence of accepted imprecision is still keenly felt in Whitehall. Too frequently, "no statistics" is used to imply "we have no idea of the magnitude of this problem" – but that's not true. We actually know quite a lot, albeit imprecisely. The trick is acting on it.

Photograph: Getty Images

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

Photo: Getty
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The Conservative-DUP deal is great news for the DUP, but bad news for Theresa May

The DUP has secured a 10 per cent increase in Northern Ireland's budget in return for propping up the Prime Minister.

Well, that’s that then. Theresa May has reached an accord with the Democratic Unionist Party to keep herself in office. Among the items: the triple lock on pensions will remain in place, and the winter fuel allowance will not be means-tested across the United Kingdom. In addition, the DUP have bagged an extra £1bn of spending for Northern Ireland, which will go on schools, hospitals and roads. That’s more than a five per cent increase in Northern Ireland’s budget, which in 2016-7 was just £9.8bn.

The most politically significant item will be the extension of the military covenant – the government’s agreement to look after veterans of war and their families – to Northern Ireland. Although the price tag is small, extending priority access to healthcare to veterans is particularly contentious in Northern Ireland, where they have served not just overseas but in Northern Ireland itself. Sensitivities about the role of the Armed Forces in the Troubles were why the Labour government of Tony Blair did not include Northern Ireland in the covenant in 2000, when elements of it were first codified.

It gives an opportunity for the SNP…

Gina Miller, whose court judgement successfully forced the government into holding a vote on triggering Article 50, has claimed that an increase in spending in Northern Ireland will automatically entail spending increases in Wales and Scotland thanks to the Barnett formula. This allocates funding for Wales, Scotland and Northern Ireland based on spending in England or on GB-wide schemes.

However, this is incorrect. The Barnett formula has no legal force, and, in any case, is calculated using England as a baseline. However, that won’t stop the SNP MPs making political hay with the issue, particularly as “the Vow” – the last minute promise by the three Unionist party leaders during the 2014 independence referendum – promised to codify the formula. They will argue this breaks the spirit, if not the letter of the vow. 

…and Welsh Labour

However, the SNP will have a direct opponent in Wales. The Welsh Labour party has long argued that the Barnett formula, devised in 1978, gives too little to Wales. They will take the accord with Northern Ireland as an opportunity to argue that the formula should be ripped up and renegotiated.

It risks toxifying the Tories further

The DUP’s socially conservative positions, though they put them on the same side as their voters, are anathema to many voters in England, Scotland and Wales. Although the DUP’s positions on abortion and equal marriage will not be brought to bear on rUK, the association could leave a bad taste in the mouth for voters considering a Conservative vote next time. Added to that, the bumper increase in spending in Northern Ireland will make it even harder to win support for continuing cuts in the rest of the United Kingdom.

All of which is moot if the Conservatives U-Turn on austerity

Of course, all of these problems will fade if the Conservatives further loosen their deficit target, as they did last year. Turning on the spending taps in England, Scotland and Wales is probably their last, best chance of turning around the grim political picture.

It’s a remarkable coup for Arlene Foster

The agreement, which ticks a number of boxes for the DUP, caps off an astonishing reversal of fortunes for the DUP’s leader, Arlene Foster. The significant increase in spending in Northern Ireland – equivalent to the budget of the entirety of the United Kingdom going up by £70bn over two years  – is only the biggest ticket item. The extension of the military covenant to Northern Ireland appeals to two longstanding aims of the DUP. The first is to end “Northern Ireland exceptionalism” wherever possible, and the second is the red meat to their voters in offering better treatment to veterans.

It feels like a lifetime ago when you remember that in March 2017, Foster was a weakened figure having led the DUP into its worst election result since the creation of the devolved assembly at Stormont.

The election result, in which the DUP took the lion’s share of Westminster seats in Northern Ireland, is part of that. But so too are the series of canny moves made by Foster in the aftermath of her March disappointment. By attending Martin McGuinness’s funeral and striking a more consensual note on some issues, she has helped shed some of the blame for the collapse of power-sharing, and proven herself to be a tricky negotiator.

Conservatives are hoping it will be plain sailing for them, and the DUP from now on should take note. 

Stephen Bush is special correspondent at the New Statesman. His daily briefing, Morning Call, provides a quick and essential guide to domestic and global politics.

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