Facts Are Not Democracies

Take a look at this AP story from Jeannine Aversa regarding the economic stimulus package:

An increasing number of economists, however, believe the country has already fallen into its first recession since 2001, and they are simply hopeful the rescue package will limit the damage. Most people - 61 percent - say the economy is now in a recession, according to the AP-Ipsos poll.

We're told that "an increasing number of economists" believe it (certainly so), but we're given a very different piece of data to complete the thought. Not to say there isn't currently or isn't going to be a recesion, but how would 61% of the general population know? Have 61% of people been laid off? Do 61% of people have any personal knowledge of the state of the economy whatsoever, or even know where to start looking?

Of course not, but most of the people who would know seem to think it'd be irresponsible to make assertions of fact at this point, and this was much easier than calling around for a quote from someone who'd actually know what they're talking about. You can bet that 61% of people, if asked to define a recession, most certainly could not do so. This is a problem that was noted in 2001, as well, by The Motley Fool's David Gardner.

"Recession" is defined as a decline in real gross domestic product for two consecutive quarters. Many people out there today who are tossing around "that 'R' word" are not doing so with a clear sense of what it actually means.....Next time you hear the word -- any time you hear the word -- quiz the speaker. Go ahead. Just say, "Well, Mike... and how do you define 'recession,' exactly?"

I suspect that 61% of journalists can't define it, either. Since the media provides the entirety of most people's knowledge about the economy, one would think it raises an ethical concern to present a poll of media consumers as evidence that media claims are true, despite the fact that for all intents and purposes, most of us are roughly as capable of constructing an informed opinion on the subject as Ozzy Osbourne.

Not that there's no place for that polling data, there is, but it is not in economic analysis.

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