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Citizens, as well as politicians, need data on which to base decisions. Every day, millions of individual and collective decisions are taken on the basis of statistics. But poor statistics can lead to poor decisions. While there is broad consensus on the need for high-quality statistics among policy makers and the business community, much less importance is given to the data needed by citizens to make their individual decisions. This is becoming even more important. People today are asked to make more decisions than ever before - decisions that can be vital to their long-term well-being.
Although statisticians are getting better at producing reliable and timely statistics the “statistics, knowledge and policy” chain is – for a variety of reasons - far from well established in most countries.
Economic and political theory affirms the importance that better information plays in increasing social welfare. But, information alone is not enough: it needs to be turned into knowledge and hence concrete behaviour. It is knowledge that will improve the functioning of our economies, societies and democracies.
A healthy political process needs a citizenry with access to accurate information about the results of past policies (i.e. economic and social outcomes) or the expected results of the policies foreseen. There are various ways to measure economic and social outcomes and it is quite common that the various parties participating in elections make reference to different data to try to get their point across. But what if all parties agreed on a “shared information set”, i.e. a set of indicators referring to the overall progress of a nation/society that could be used by all parties involved in a policy debate? What if discussion moved from disagreeing over the ‘facts’ about what had been achieved in a politician’s last term of office, to a facts-based discussion on the whether and how a nation was progressing and what needed to change. To say that this could change the political game is an understatement. But what should the shared information set contain, how should it be defined and by whom?
A key issue for policy making and democratic governance
Statistics, Knowledge and Policy: Theoretical Foundations
The relationship between information and economic theory was first analysed by neoclassical economists. People, according to economic theory at least, are supposed act in a perfectly rational way, and also be fully informed about relevant economic facts, such as the quality of goods, prices, etc. This assumption has since been criticised, with economists now trying to understand the reality of a world in which information is incomplete or asymmetric.
Information also plays a key role in the formation of expectations. When economic decisions need to be taken under uncertain conditions, people form expectations on the future, and use as much information as possible to do so. But information is costly to collect and people tend to rely on the public information available, including official statistics. If there is “confusion” about the evidence, or mistrust in the statistics, then decisions will be suboptimal (the connection between the credibility of official statistics and the functioning of economic markets is extremely important in modern societies, where the media play a key role in influencing public opinion and expectations about future economic developments).
The importance of information goes beyond economic markets, of course. For example, the election mechanism can be seen as a “market” in which politicians supply alternative policies according to the demand of voters. There are costs and benefits to voting. One cost is that of collecting information. Acquiring information about candidates and policies can be expensive, perhaps too expensive if an individual believes that they alone will have little impact on the final outcome of the elections. Citizens may be rational, but they are often uninformed or misinformed. This is not good for democracy. The effects of this have been carefully examined and the main findings of this literature can be summarised:
The more voters are able to learn about the outcomes of policies, the greater the incentive to politicians to make better policies. Because information about the outcomes of policies ought to play a key role in helping citizens take their decisions at the ballot box. Statistics have been described as the life blood of democracy. Moreover, measures of actions - properly publicised - help society to achieve better goals with fewer resources.
International Survey on what people know about societal progress
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