The visible hand in economics

PSA: Just more misleading statistics

Posted on: September 23, 2008

I was interested to see the Standard and No Right Turn link to a PSA advert from the latest Listener. The advert seems like a whole lot of mis-information piled right into a single page.

The criticism of the ad is quite simple – they come up with a sum and then they take away jobs people actually do care about in order to get to that sum, rather than actually describing the jobs that will be cut for any tax cut. Now I think people should know that a tax cut will lead to a cut in government spending – but telling them it will lead to less nurses is just wrong.

Furthermore, by illustrating the individual benefit but focusing on the full cost to society from the change, they exaggerate the size of the cost to the individual. If we have one less policy analyst what will that cost the individual compared to the 10c gain?

Ultimately, I agree that we as a society need to discuss the trade-off between the level of government spending and the size of tax cuts. However, the type of argument provided by the PSA ad (along with their constant stream of news releases) implies that spending by government is “virtuous” while the same spending by the individual is “waste” – I am not comfortable with this line of reasoning.

Anyway, given current policies and polling I suspect the trade-off will look more like this:

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9 Responses to "PSA: Just more misleading statistics"

Also funny that they are aruging the line that the PSA isn’t taxpayer funded. Sure it doesn’t recieve direct funding from the government, but how are 100% of its members funded?

Jeez, the way you have it painted had me more scared rather than less!

“Also funny that they are aruging the line that the PSA isn’t taxpayer funded. Sure it doesn’t recieve direct funding from the government, but how are 100% of its members funded?”

I guess it depends on how you want to view its intention. It isn’t directly tax payer funded, so you can’t say “our funds are being wasted on it”.

However, the PSA definitely has an incentive to maximise government spending.

“Jeez, the way you have it painted had me more scared rather than less!”

Really? From what I hear there are some government departments where the marginal product of a new employee is negative – if anything I thought that removing those analysts would not provide any trade-off (except in terms of the welfare of the analyst I guess :) ).

It would have me more worried – an influx of policy analysts onto the Wellington labour market would definitely put downward pressure on my wage :P

It would have me more worried – an influx of policy analysts onto the Wellington labour market would definitely put downward pressure on my wage :P

That would imply that their labour input is substitutable for yours, something I highly doubt!

“That would imply that their labour input is substitutable for yours, something I highly doubt!”

Just because their marginal product is currently zero I have no doubt some of these people could make fine macro-economists – it isn’t that hard after all :P

Furthermore, there marginal product is negative not because their individual production is negative – no that is probably positive. it is the negative impact a worker has on the marginal product of other workers that makes the marginal product negative.

Derived demand for econ lecturers…where do analysts (decent ones, anyway) come from?

I kid though.

“MikeE
Also funny that they are aruging the line that the PSA isn’t taxpayer funded. Sure it doesn’t recieve direct funding from the government, but how are 100% of its members funded?”

Since you have been thoroughly dressed down for this comment on the standard, care to retract it here?

“Derived demand for econ lecturers…where do analysts (decent ones, anyway) come from?”

I suppose it may increase the supply of economics lecturers slightly – however, given the difference in skills between the private and public sector, it may also lead to an increase in demand for economics degrees – which will increase demand for your services and drive up your wage!

“Since you have been thoroughly dressed down for this comment on the standard, care to retract it here?”

From what I could see the people at the Standard only said the same thing we have here – namely that it isn’t directly funded by the taxpayer. However, MikeE’s point that the PSA has a intrinsic incentive to back parties that will increase government spending does hold.

“Since you have been thoroughly dressed down for this comment on the standard, care to retract it here?”

Nope, It still stands.

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