The Economic Statistics Working Group (ESWG) is a joint initiative between a number of expert groups, including the Royal Economic Society, the Society of Professional Economists and the Royal Statistical Society, working with the Office for National Statistics, in order to engage with issues around economic measurement. ESWG member and chair of ONS Economic Experts, Joe Grice, explains what the group has done so far and its aims for the future.
We live in a world where huge changes are occurring both in our societies and the ways that our economies work. Advances in technology mean that new products and services are emerging that did not exist only a few years ago: a mobile phone today is a very different proposition from one ten years ago. These same leaps in technology are also influencing existing products and services, pervasively changing their character and quality.
We also live in a genuinely globalised world. The days when a country’s factories produced and its households consumed are long gone. Increasingly complex modes of production often involve multiple countries and it is nowadays impossible to understand an economy’s behaviour without reference to the 'global value chains' that underpin it. At the same time, international financial and capital markets are increasingly interrelated in complex ways so that the ownership of assets may have little relationship to their location.
Such developments present significant challenges for the accurate measurement and assessment of economic developments. However, technology has also brought countervailing opportunities. The advent of 'big data' and increased possibilities for using administrative data for its information content are both potentially powerful tools to address these challenges, if such opportunities can be exploited.
But if the challenges in measuring a modern economy are to be tackled, and the wider opportunities for doing so are to be exploited, increased collaboration between economists and statisticians would seem to be indispensable. This was one of the main messages of the report on UK economic statistics which Professor Charles Bean published in March 2016, in response to a commission from the then Chancellor of the Exchequer. In fact, looking back at the main economics and statistics journals of forty or so years ago, many of their contributions were concerned with measurement issues, as much as with economic theory and its application. But subsequently measurement has tended to drift apart from the rest of economics to the extent of there being almost two separate communities.
For these reasons, at the end of 2016, the Office for National Statistics (ONS) proposed to the Royal Economic Society (RES) and to the Royal Statistical Society (RSS) that there should be an initiative to generate greater joint working on issues of economic measurement. Both Societies responded positively and this led to setting up the Economic Statistics Working Group (ESWG). It is jointly chaired by Iain Wilton (RSS) and Tom Crossley (RES), and has members from both Societies. ONS are also members of the group. Subsequently, the Economic Statistics Centre of Excellence and the Society of Professional Economists have also joined. Driven by an overall goal of raising awareness of economic measurement and engagement with the issues this topic raises, ESWG oversees a number of activities.
One is to increase the capability to deal with problems of economic measurement. More specifically ESWG has been designing and providing training courses in topics of economic statistics. These are aimed to be suitable for undergraduates or early stage graduates but are not exclusively targeted at these groups. One such course was led by Francois Lequiller (ex OECD and Eurostat) on national accounting. Huw Dixon (Cardiff Business School) has taught a similar course on issues in measuring prices and inflation, and Stephen Jenkins (LSE) on topics in measuring inequality. A series of similar future courses is also planned, including the repetition of previous ones.
A second activity has been to organise a series of (ticketed but free) public seminars.
The first took place at the Shard last summer. Jonathan Haskel (Imperial) and Diane Coyle (Manchester), together with ONS speakers, talked about measuring intangibles and new forms of economic activity. Both Jonathan and Diane were subsequent winners, of course, of the Indigo Prize, awarded after a competition for the design of new ways to measure economic activity in the twenty-first century, and Jonathan has just been appointed as a member of the Bank of England’s Monetary Policy Committee (MPC), which is responsible for setting UK interest rates.
This was followed later in the year by an event at the Bank of England on measuring health service productivity. Peter Smith (Imperial), and Nancy Devlin (City) were the main speakers and ONS presented on its latest work in this area of measurement.
In March this year, an event was organised to discuss natural capital and its role in environmental policy. Miranda Winthrop (Forestry Commission) and Emily Connors (ONS) outlined work carried out to construct natural capital accounts for the UK. Nick Barter (Department for the Environment, Food and Rural Affairs) followed by setting out how these accounts and metrics played a central role in the Government’s newly published 25-year Environment Plan.
These seminars were extremely well attended and each generated lively questions and discussion. The next seminar is being held in July on the challenges and opportunities in price measurement at the Shard in London. Further seminars on such diverse topics as the flow-of-funds and the financial accounts and sub-national/small area statistics are scheduled for the rest of 2018.
Third, ESWG has a mission to raise the level of public debate in relation to economic statistics. Discussions about the economy form a large part of overall national discussion and debate. It is important that the standard of such debate should be as high as possible and underpinned by a good understanding of the strengths and weaknesses of the main economic statistics and the various issues that they raise. Providing input into journalism courses is an example of a concrete way in which ESWG plans to achieve this aim.
Overall, in just over a year since its inception, ESWG has put in place a number of means to approach its target of increased attention to economic statistics and finding ways of encouraging collaboration to tackle the issues and challenges that these involve. But it is only a start and a lot remains to be done. For example, finding ways to engage with schools is clearly important and desirable and now needs to be taken forward. So, too, does the task of influencing and raising the standard of public debate.
Most of all, ESWG will ultimately be successful only if it is inclusive and open to suggestions and ideas widely. Accordingly, if you would like to know more about ESWG or to be involved in its activities, or have suggestions for the way forward, please email EconStats@res.org.uk.
Photo shows the Shard in London, venue to the forthcoming ESWG seminar on challenges and opportunities in price measurement.