It is hard to think of a website so loved by its followers and so scorned by economists as John Williams’ ShadowStats, a widely cited source of alternative economic data on inflation and other economic indicators. Any econ blogger who has ever written a line about inflation is familiar with ShadowStats. Time and again, readers cite it in comments, not infrequently paranoid in their tone and rude in their language. Brief replies that cast doubt on some of more extreme claims made by ShadowStats fans don’t seem to have much effect. After a recent round of comments, I promised the editor of one website to undertake a thorough deconstruction of ShadownStats. Here is the result....Economonitor — Ed Dolan's Econ Blog
Deconstructing ShadowStats. Why is it so Loved by its Followers but Scorned by Economists?
Ed Dolan
The people who follow ShadowStats are the same loonies who follow Peter Schiff and Alex Jones. Conspiracy theorists and other cult like personalities.
ReplyDeleteIt's the ONE time I might give some credit to economists (who mostly don't deserve any credit at all) only because they don't follow this shit.
That was an excellent article, and demonstrates clearly how Williams' calculations are off base. But I think Williams is on to something in spite of his methodological flaws. To quote Dolan:
ReplyDelete"...He [Williams] argues that the BLS has adopted methods that produce low inflation indicators, but not for motives of short-term partisan politics. Rather, he sees the choice of methodology as driven by a longstanding, bipartisan desire to reduce the cost of Social Security and other inflation-indexed transfer payments. It would be hard to deny that he is at least partly right about that motivation."
As I recall, a major criticism that Williams makes in changing the goal posts by redefining the index. then the new index is used as if it producing the same output as previous versions, so that historically the graph is shifting although it really the index that is changing.
ReplyDeleteThis is an issue in using historical data uncritically in economic comparisons, as MMT economists often point out. It's easy to be confused if the name is the same, even though the context is different and therefore the meaning, too.
"Do you believe those numbers?!?!?!!"
ReplyDelete