Padding The Numbers

For years, economists have tried to disseminate whether or not economic numbers provided by dictatorships were accurate.

One alternative measures energy imports and its correlation to reported outputs. Some economists say they don’t look at the numbers but the trend.

Recently, Luis Martinez, assistant professor at the University of Chicago published a paper supplying another alternative to looking at the reliability of autocratic governments reporting their economic growth (GDP).

His project looked at the lights shining at night as a proxy for the economy. Dr. Martinez said, “As an economy expands, there are more houses, more factories, more streetlights. All of that produces light.”

Using satellite data, as a general rule, dictatorships, on average, report their GDP 35% higher than the night lights would portend. The data ran from 1992 – 2013 and again using more precise instruments from 2014 – 2018. The pattern was maintained.

While there can be exceptions from one year to the next, the pattern has been consistent. China, is a prime example of doubtful reporting. Recently, Russian numbers were suspicious because of the war in Ukraine. The picture they pose is far too positive.

Even non-autocratic governments might alter the numbers intentionally or unintentionally. According to Martinez, India reported a more robust GDP than night lights would dictate.

Dr. Martinez said, “Perhaps we should be a bit more cautious in the way we use their numbers and how much we trust them.”

Based on a January 21, 2023 Wall Street Journal story by Josh Zumbrun