Friday, May 4, 2012

The issue with targeted metrics

Felix Salmon talks about the Employment Participation Rate:

The number the politicians look at, however, is the unemployment rate, which ticked down to 8.1%. That’s still high, but it’s not a statistic to beat Obama round the head with.


For demographic reasons — the retirement of the baby boomers — the labor force participation rate is naturally going to fall over the next decade. But go back just one year, to March 2011, and look at the official CBO projection of the labor force participation rate. The CBO saw a rate of 64.6% in 2012 — a full percentage point higher than we’re at right now. The participation rate wasn’t expected to fall to today’s level of 63.6% until 2017.
What is interesting is that people focus on the Unemployment Rate.  WHich actually makes it a less useful indicator of anything -- as there are incentives to try and frame the number in a way that looks better than it really is.  Dropping people who would like a job but are no longer looking from the sample is a clever way to make the number look better. 

I suspect that the same issue will happen with any high-stakes metric. 

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