Monday, 17 August 2015

Dodgy charts in general

There is a bigger problem with the chart I previously mentioned (here you go:)

 Similar charts do the rounds at every US election, "showing" how Democratic presidents are better for growth. I've even seen them circulating on political science mailing lists, whose members should know better.

The bigger problem is assuming that there are no long-term policy variables. But it is obvious that one period's policy lays the foundations for growth or failure in future periods.  It is also well known that you can boost GDP by spending too much, and that this will have to be paid for in future.

Maybe Democrats or Labour are in fact better for the economy. But charts like the above don't prove that, because "growth is better under X" does not imply "X is better for growth". I spend big when I go to Swansea Vegas; that doesn't mean that moving to Swansea Vegas will increase my spending power.

Sorry: empirical public economics is harder than that.