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Econospinning: How to Read Between the Lines When the Media Manipulate the Numbers

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Dear "Auros of Palo Alto":

If you're going to "review" my book without bothering to read any of it, your remarks should at least be cribbed from someone who actually has read it. But blogger Brad DeLong, whose critique you parrot in detail, barely finished a few paragraphs, as you yourself will discover if you check out my response to DeLong on my own blog, econospinning.com--a running commentary on media reaction to my book.

Just for starters, you'll find that if DeLong had only finished reading the three pages my book devotes to the employment report and the bond market, he would have discovered that I did not commit the naive error he attributes to me--and which you, as DeLong's dupe, then repeat.

Of course I looked at the bond market's response to the employment report immediately before the data are released, as DeLong would have discovered if he'd only read a few more paragraphs in that three-page section. Do you think I could write for a sophisticated market weekly like Barron's for the past 14 years and not know that markets move on expectations?

By trusting DeLong, dear Auros-of-Palo-Alto, you remind me of the dumb guy from junior high who didn't even know to cheat off someone who had actually done the reading!

But it's not too late to reform. Try reading my blog, then try my book--and then I suggest you try writing a review based on your own opinions.

Warmly,

Gene Epstein

My favorite parts of the book are 1) Epstein's surprisingly simple demolishing of the Freakonomics abortion thesis 2) the exposure of NY Times columnist Krugman's unwillingness to acknowledge the coming eldercare-entitlement crisis 3) The tidbit at the end about Malcom Gladwell on healthcare and "moral hazard."

The reviewer below apparently hasn't read the book--he simply read the blog of Brad DeLong. He has plucked out exactly same sections of the book as Delong, while echoing verbatim what DeLong wrote about Epstein's book. DeLong, a University of California economist, happens to be criticized in Epstein's book, which apparently set him off on a rant on his blog peppered with phrases like "Epstein has the stupids" and "Must... adjust medication doses."

... then you should read this book. Epstein spends at least half on labor indices and their abuse by pundits (Krugman, CNBC, et al.). That will be a hard slog for someone who does not make her living looking at numbers. (I am a PhD student in economics.) Luckily, Epstein offers a sensible solution (12 month moving averages of employment) that people who bet money on the employment figures could use. He attacks (his words) the "perfection" of Greenspan-the-technocrat convincingly but fails to mention that Greenspan's biggest strength was people's belief in him. This is good news/bad news: numbers are hard for people to understand -- compared to feelings -- and someone who makes things seem "just right" can indeed make it so. NOT so in the case of Lou Dobbs (known idiot), Krugman or Levitt, when they offer hocus-pocus that supports peoples' underlying prejudice, eg, foreigners are bad/taking out jobs, the republicans are robbing the little guy, RE agents rip you off when selling your house, or crime fell b/c there were fewer unwanted BLACK criminals. Epstein does a good job showing that those numbers have weak support but -- alas -- does not provide alternative numbers. This is the work for others, of course, but it will not give readers a conclusion to take away -- only doubt, which is a good thing to have in any case.

I am an average reader to economists: never took a course in the subject, have read and heard statistics quoted and interpreted in the mass media. I appreciate the correction in this book of errors in the mass media. I shall look upon the writers and publications scrutinized by this book with stronger analysis now. But I wish the author of this book had enjoyed the privilege of a better editor.

One disappointment about this book is that it itself commits errors. In the name of identifying journalist errors, it commits author errors. They are of the sort a non-economist editor would notice. They may not always affect the author's thesis or argument but they make the thesis and argument less accessible to the public.

(Page number references are from the year 2005, hardcover edition.)

One type of error is carelessness. In a somewhat unimportant error, Epstein says that unincorporated self-employment is the only category that the Household Jobs Survey includes and that the Establishment Survey omits (33). Epstein himself was pointing out three paragraphs earlier, though, that agricultural occupations -- farming, forestry, fishing, and hunting -- are overlooked by the Establishment Survey while included in the Household Survey. Even though the growth of agricultural occupations was flat over recent years, to say later that only unincorporated self-employment is tracked by the Household Survey and omited by the Establishment Survey is to speak too loosely for the average reader to follow.

Epstein complicates acceptance of his views by committing errors of inconsistency. First, he points out that unemployment duration is longer now than in earlier decades because women have come to participate in the work force in more serious career positions and look for work more carefully after they leave their job. The work force is older and older workers are also more careful about what position they accept. (46) Later, he says that Bureau of Labor Statistics economists adjust for the 1994 redesign of the Household Survey and find that unemployment duration was longer in 1990 than in 2000, and 2000 durations were not longer than in 1980. (48) What makes this inconsistency even bigger is that he just went through a long analogy to cancer, to explain a job situation in which unemployment durations are longer. He said there are more cancer cases nowadays only because more people live longer, comparing people who live longer to women and older people who look for work more carefully. Enviromental and dietary factors are not to blame for more cancer cases, just as the job market is not to blame for longer durations of unemployment. (45-46) So, there must be longer durations of unemployment in recent years --- or have there not been?

Epstein's wording is also misleading sometimes --- not saying what he intends to say. The Bureau of Labor Statistics revised their definition of Hidden Unemployed in 1994 by adding two new qualifications to the old ones ("also had to answer yes to these two questions", p. 63). One of those old qualifications was giving a job market reason for not looking for a job during the past month. But after he describes the two new qualifications, he says most of those who meet them "gave reasons other than discouragement for not having looked for work over the past month". But that reason was required under the old design; it is still required to be included in the Hidden Unemployed category. It takes a lot of thinking about it, puzzling, to figure out that those two new qualifications for Hidden Unemployment really aren't in addition to the old ones but are part of a different combination of qualifications to be fit in that category.

Also misleading is Epstein's use of "discouragement". Discouragement means more than some type of reason for not looking for work. Although in normal conversation, discouragement is a term that could describe an attitude about the job market, in this discussion the term has a larger meaning. Discouragement is a BLS category of responses to a lot of questions. It means all of the qualifications that the BLS looks for in fitting an individual into this category. Confusion results from using the same term in the same discussion, without note, in different ways. He says that most of those who "also had to answer yes" to the two new questions gave reasons other discouragement for not looking for a job. His decision to use the word "discouragement" for giving other than a job market reason throws the passage into chaos. We are to think that even though they are not "discouraged", they are Discouraged Workers.

These four writing style errors were found by reading three chapters. Imagine how much difficulty and error results from reading the whole book!

It is very entangled writing, and makes for much re-reading, not say dizziness. Just as the mass media's often brief treatment of the economy makes their audience unsure what to think without further reflection, Gene Epstein's unclear and inconsistent presentation keeps his readers unsure what to think, too. If this is supposed to be a book so the average person can make sense of mass media coverage, it should be more accessible to the public.

Epstein is very skilled at explaining difficult concepts (difficult at least for me) in clear language. This book is thought-provoking, carefully reasoned, fun to read.

In many ways this book is a gem. It encourages critical thinking and it provides useful information on employment data and variety of other topics. However, if you are an average reader hoping that after reading this book you will be able to identify when the media manipulate the numbers, you will probably be disappointed. Even Mr. Epstein suggests in the last paragraph of the book that he did not have much to say to help an average reader cope with econospinning. This is too bad because most people could benefit from his general approach to the issues: go straight to the source of data, make your calculations and logic transparent and respectfully challenge people who engage in spinning.

If you decide to read this book, your payoff for going through rather dry writing is greater transparency of some of the key economic and social data as well as unmasking political agendas of New York Times, Wall Street Journal and other media outlets. The pay off to the reader could be even greater if Mr. Epstein spent more time describing his rationale for choosing certain sets of data. For example, it would be interesting to hear why it makes sense to measure corporate profits as a percentage of GDP (and why not adjust profits to reflect accounting changes). It would also be interesting to hear why Mr. Epstein did not push the numbers further in his critique of Nickel and Dimed by taking a closer look at the debt burden of the poor and trends among working poor.

Finally, the book would be a little easier read for an average reader if Mr. Epstein used consistent data for a number of civilian noninstitutional population of 16 and over (or explained such a big difference from one year to another): 292.4 million for 2005 (on page 29) and 222.8 million for 2004 (on page 23).

Econospinning is beautifully written, funny and provocative in a good way.
Author Gene Epstein confronts the elite media and helps us think more clearly about the economy. He questions where we're heading on social security, medicare, medicaid, and guides us through the media spin.

Everyone has heard the expression "torture the data until they confess" but hardly anyone screams about how that happens on almost a daily basis in the media. Commentators, reporters, pundits, analysts seem to have a point of view and then refer to economic indicators that buttress their position. How backwards. The numbers are the numbers and those who care about them ought to demand that they be honestly reported and analyzed. Epstein shows how data get massaged to buttress political points to help us all see things a little clearer. What a pleasure. Someone interested in reality over political posturing.

The author contends much of the economic news we get is wrong. Some of it is intentionally
wrong, provided by politicians or partisans, and hence the title. Some of it is manufactured
news, turning a statistically insignificant change into a headline, and some is just wrong.
People make mistakes.

This is an important and useful book. I wish everyone would read it. The examples are from
USA, but similar things probably happen everywhere. The book is not partisan. Errors that
favor Democrats and errors that favor Republicans are both covered. There are various other
examples that are not political.

If you consider this book, you might also try "On the Accuracy of Economic Observations" by
Oskar Morgenstern, who is most well known for his work with John von Neumann on "The Theory of
Games and Economic Behavior." It is much drier, but more thorough; the examples are far from
current, but most of the underlying problems probably still exist.

The biggest problem with this book is the inaccuracy of the title page. Most readers construe
"spinning" as self serving versions of reality. There is some of that. Paul Krugman gets a lot
of attention, but most of it is deserved. Some other statements, by Krugman and others, are in
areas that seem grayer than Epstein believes. Some of his examples are of manufactured news,
typically a released statistic showing a tiny change, with error bounds much larger than the
change, becomes a news story treating the statistic as real, and accurate. Some seem to be
just errors. Humans make mistakes.

The subtitle is a bigger problem. Epstein does not tell us "How to Read Between the Lines When
the Media Manipulate the Numbers."

My suggestion to the media: report all the data, including pointers to the raw data and the
methods used to gather it. Let the readers decide how to interpret it.

My suggestion to the public: Be skeptical. Ask for details. Read the analysis provided by those
you tend to disagree with.

In spite of the flaws, I still recommend the book. You can learn how big the gulf of possible
error is. But remember the gulf is probably much larger than this one book reveals.

This is one of the best books I've read in several years. Epstein's arguments are fact-based and logical. Be prepared to follow some mathematical reasoning - but it is not difficult, just a bit tedious sometimes.

I've read three Krugman's books and Freakonomics in the past, and personally I find Epstein's reasoning far more convincing.

Don't disregard this book simply because you think Epstein is a political right and he hates Paul Krugman. This has nothing to do with his argument, which is superb.