Lies, dictatorships and statistics

Whenever the Turkish Statistical Office (TÜİK) releases an official statistic, I always get emails from at least a couple of readers who question the data. They have a point. After all, in a country where a multi-billion dollar graft scandal has been covered and murderers walk free, a few massaged numbers should not be a big deal.

I get the most emails after inflation data. After all, people cannot observe growth or the current account deficit directly, but they see changes in prices regularly. For example, a reader responded to my column on August inflation by noting that “after going to the bazaar on Saturdays, the figure of 9.5 percent seemed a bit low.”

I told him annual food inflation was nearly 15 percent, which is the rise in prices of a typical consumer’s food basket: The prices of some fruits and vegetables actually fell in August. In fact, trust in official statistics is a global issue. For example, no one takes the official inflation figure in Argentina seriously, and economists have come up with their own measures, but I honestly don’t think TÜİK is making up the inflation numbers.

Another globally-contested statistic is growth. Many economists feel China manipulates its growth figures from time to time. For example, the first quarter growth of 7.1 percent was seen as unrealistic. While many leading indicators pointed to a significant pick-up in economic activity in the second quarter, growth only marginally improved, supporting suspicions.

In a recent paper titled “Reconsidering Regime Type and Growth: Lies, Dictatorships, and Statistics,” economists Christopher S. P. Magee and John A. Doces try to estimate if autocratic regimes like China do indeed overstate their true economic growth.  By using the change in satellite data on nighttime lights as a proxy for economic growth, “annual GDP growth rates are estimated to be overstated by 0.15-1.5 percentage points.”

While the results are definitely intriguing, I would not accept them as hard facts. For one thing, I can think of several reasons why the change in nighttime lights could be a bad proxy for growth. There could be a myriad of country-specific factors that could cause some countries (or their nighttime lights) to grow faster than others. The results would be much more convincing if the authors looked at transitions from democracy to dictatorship and vice versa.

In any case, I would not question Turkish growth statistics because of this study. After all, the paper does not apply to Turkey at all. Even though the Turkish economy did not triple during the last decade, as Finance Minister Mehmet “Nominal” Şimşek is claiming, I would doubt that it is overstated. After all, as President Recep Tayyip Erdoğan often notes, Turkey is not a dictatorship but an advanced democracy.

But I would nevertheless want Erdoğan’s chief economic adviser Brave Cloud to be aware of the paper. As economist Erik Meyersson noted in a blog post, most of the countries that grew more than Turkey during the last decade are dictatorships. If he is aware of the paper, Bravie may conclude that Turkey does not need to become more autocratic to grow more.