Japan in Government criticizes current standards for economic statistics
Active discussions are now under way on how to review economic statistics such as the gross domestic product.
In addition to some people’s belief that the statistics don’t reflect the real economy, the discussions have been prompted by irritation among government members that they do not show the results of policy. Accurate statistics are necessary to craft effective policies, but many different viewpoints are reflected in the debate.
Doesn’t feel right
The first meeting of the Liberal Democratic Party’s project team to develop new economic statistics was held on Thursday. “The figures for GDP do not match our daily sense,” said team chairman Yoshimasa Hayashi, a lawmaker in the House of Councilors.
Nearly four years have passed since the launch of the Abenomics ecnomic policy package, but the GDP growth rate remains low. Quarter on quarter, the real GDP rose 0.2 percent in April-June. GDP is one of the most widely used measures to define a nation’s economic scale and trends, and has a powerful influence on economic policy.
The GDP has also been criticized by a member of the government. Administrative Reform Minister Kozo Yamamoto expressed his intention to review the statistics, saying, “We don’t know to what extent we can trust the GDP.”
Yamamoto sees himself as a “founding father” of Abenomics, as he called for significant monetary easing by the Bank of Japan from early on.
When the GDP growth rate moves in the region around zero, slight moves to positive or minus change people’s impression of the economy. Nihon University Prof. Yasuyuki Komaki, who specializes in macroeconomics said, “Awareness of the need to increase the precision of statistics is growing more than ever before.”
Limits to statistics
GDP is estimated using fundamental statistics such as the family income and expenditure surveys, which collect data on private consumption, and the consumer price index, which indicates price trends. Fundamental statistics mostly depend on investigators committing large numbers of human resources to the task. These statistics ensure accuracy but have limits.
The family income and expenditure surveys investigate the daily course of family expenditures by having 9,000 households keep strict accounts. Survey respondents tend to consist of families including senior citizens and housewives who have time to spare. It is not easy to expand the range of survey respondents.
The CPI is estimated based on the prices of food and other goods that investigators research by frequently going to retail stores. However, this does not sufficiently reflect trends in online shopping, which has expanded recently.
Problems with fundamental statistics have been pointed out for some time. “They became subject to criticism because the economy is not improving as much as it expected,” an expert said.
Awash in panels
The Statistics Commission of the Internal Affairs and Communications Ministry, which acts as a control tower to develop statistics, and the Council on Economic and Fiscal Policy chaired by Prime Minister Shinzo Abe have started their respective discussions on the review of economic statistics.
Internal affairs minister Sanae Takaichi also set up a panel in September to develop new standards for statistics on private consumption.
There are at least five panels to discuss statistics, but the number of staff to develop statistics has continued to decrease. The number of government officials involved with statistics has decreased by about 20 percent over the 10 years through 2015, and due to the aging population, the number of investigators who research households and retailers is also falling.
It is strongly believed more staff and money are needed to improve the quality of statistics.
“It’s important to analyze figures on the presupposition that statistics have their limits. The idea that statistics are inaccurate is fundamentally wrong,” an economist said.
Discussions to improve statistics are expected to examine the possibility of using data on retailers’ sales and taxes. Another issue is how to reflect the diversification of services in the statistics.
University of Tokyo Prof. Tsutomu Watanabe, who specializes in macroeconomics, said the government should develop pioneering new statistics and change international standards
In addition to some people’s belief that the statistics don’t reflect the real economy, the discussions have been prompted by irritation among government members that they do not show the results of policy. Accurate statistics are necessary to craft effective policies, but many different viewpoints are reflected in the debate.
Doesn’t feel right
The first meeting of the Liberal Democratic Party’s project team to develop new economic statistics was held on Thursday. “The figures for GDP do not match our daily sense,” said team chairman Yoshimasa Hayashi, a lawmaker in the House of Councilors.
Nearly four years have passed since the launch of the Abenomics ecnomic policy package, but the GDP growth rate remains low. Quarter on quarter, the real GDP rose 0.2 percent in April-June. GDP is one of the most widely used measures to define a nation’s economic scale and trends, and has a powerful influence on economic policy.
The GDP has also been criticized by a member of the government. Administrative Reform Minister Kozo Yamamoto expressed his intention to review the statistics, saying, “We don’t know to what extent we can trust the GDP.”
Yamamoto sees himself as a “founding father” of Abenomics, as he called for significant monetary easing by the Bank of Japan from early on.
When the GDP growth rate moves in the region around zero, slight moves to positive or minus change people’s impression of the economy. Nihon University Prof. Yasuyuki Komaki, who specializes in macroeconomics said, “Awareness of the need to increase the precision of statistics is growing more than ever before.”
Limits to statistics
GDP is estimated using fundamental statistics such as the family income and expenditure surveys, which collect data on private consumption, and the consumer price index, which indicates price trends. Fundamental statistics mostly depend on investigators committing large numbers of human resources to the task. These statistics ensure accuracy but have limits.
The family income and expenditure surveys investigate the daily course of family expenditures by having 9,000 households keep strict accounts. Survey respondents tend to consist of families including senior citizens and housewives who have time to spare. It is not easy to expand the range of survey respondents.
The CPI is estimated based on the prices of food and other goods that investigators research by frequently going to retail stores. However, this does not sufficiently reflect trends in online shopping, which has expanded recently.
Problems with fundamental statistics have been pointed out for some time. “They became subject to criticism because the economy is not improving as much as it expected,” an expert said.
Awash in panels
The Statistics Commission of the Internal Affairs and Communications Ministry, which acts as a control tower to develop statistics, and the Council on Economic and Fiscal Policy chaired by Prime Minister Shinzo Abe have started their respective discussions on the review of economic statistics.
Internal affairs minister Sanae Takaichi also set up a panel in September to develop new standards for statistics on private consumption.
There are at least five panels to discuss statistics, but the number of staff to develop statistics has continued to decrease. The number of government officials involved with statistics has decreased by about 20 percent over the 10 years through 2015, and due to the aging population, the number of investigators who research households and retailers is also falling.
It is strongly believed more staff and money are needed to improve the quality of statistics.
“It’s important to analyze figures on the presupposition that statistics have their limits. The idea that statistics are inaccurate is fundamentally wrong,” an economist said.
Discussions to improve statistics are expected to examine the possibility of using data on retailers’ sales and taxes. Another issue is how to reflect the diversification of services in the statistics.
University of Tokyo Prof. Tsutomu Watanabe, who specializes in macroeconomics, said the government should develop pioneering new statistics and change international standards
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