Monday, April 25, 2011
How to (spot a) lie with statistics
Paul Krugman finds the hole in the claim that government spending has increased from 19.6 percent of GDP in fiscal 2007 to 23.6 percent in fiscal 2010. There are two causes. (a) GDP itself has grown much more slowly since 2007 as previously, and (b) recession-related government spending (such as unemployment insurance) has grown significantly. These are both what we expect. During a recession the government should both continue its normal operation and increase spending to support people in trouble. Other than these two areas, there are no major increases in government spending.