Measurements Mistakes

There are a lot of numbers that get thrown around on T.V. by politicians pundits and economists when they are trying to make their points. Most of the time they have complicated names. Most of the time these numbers are used correctly but sometimes people on t.v. can use the fact that many people might not know where these numbers are coming from to trick them.

Household income is often cited to show that people have been getting poorer(adjusted for inflation). Household income has been falling. Even in recent years.
[ http://www.census.gov/hhes/www/income/data/statistics/index.html ]
Sounds bad right? Not so fast.
The size of households has been on the decline in the United States. they have almost halved in the past 50 years. [ http://www.census.gov/prod/1/pop/p25-1129.pdf page 13] This means that even though there has been a decrease in household income the amount of money per person has actually increased. When people cite household income it is used to shock people in to following whatever policy they outline.

Unemployment numbers can also be deceptive. Unemployment is calculated with the following ratio(amount of people in the labor force that do not have jobs divided by the entire labor force). Because it is a ratio, changes in the numerator or the denominator can affect the percentage. This can mean that changes in unemployment can be deceptive. Take for example a time when wages are on the rise and things are looking good for the economy. Many people may join the work force because it is now worth it to them to work( e.g. an influx of housewives starting work again) the causes the work force to grow quickly. However there may not be enough jobs for all of them; this would cause the unemployment rate to go up even though there are more people working than there were before.

This can also work in the other direction. In times where the job market is looking very week some people may become discouraged and stop looking for work until the job market is better. This causes the size of labor force but the amount of people working will stay the same. Situations like these can make unemployment numbers go down without anyone getting a job.

We put a lot of trust into people on the news to tell us the truth. Most of the time their numbers are accurate but they are only telling part of the story. Sometimes it is the meaning behind the facts and figures that contain what we really want to know.