Data gaps weaken effectiveness of economic policies
- By Stephanie Kanowitz
- Jul 07, 2021
A “more coherent national advanced technology strategy” with data at the heart is necessary for the United Stated to develop policies to promote competition, growth and opportunity, a new report finds.
Better data collection can help identify weaknesses in U.S. competitiveness that policies can address, and it can help evaluate the effectiveness of those polices, according to “Federal Statistical Needs for a National Advanced Industry and Technology Strategy,” a report published July 1 by the Information Technology and Innovation Foundation (ITIF).
To get that better data, however, a better way of collecting it necessary.
“In a pre-digital world, it made sense to rely solely on surveys. But now that a much larger share of data is already in digital form, government statistical agencies need to focus more on IT modernization and directly linking through application protocol interfaces (APIs) to private databases,” the report states.
Another way to get better data is by standardizing and linking unemployment and insurance wage claims records and adding information to them. That would let the Bureau of Labor Statistics reduce or eliminate two of its wage surveys and make many products more granular, timely and accurate, the report states. New data fields that should be added to unemployment insurance wage records include work location, job title, hours and demographics.
Government agencies should work together to better link administrative records such as tax, unemployment insurance and pollution, but the private and public sectors also should work together to ensure interoperable and consistent recordkeeping, the report adds.
“When input data is more consistent, statistics based on it will be more accurate and useful for combining across statistical agencies and for business benchmarking,” it states. “Ideally, this effort would be international, working with the International Standards Organization.”
U.S. data gaps are the result of several factors, the report states. First is funding. Years of tightening budgets have led to fewer resources for effectively measuring key elements of the economy. An effective national industrial and technology strategy requires disaggregated data that can accurately reflect state and local differences, according to the authors. “This is needed to inform not only federal policymakers (e.g., to be able to more accurately identify parts of the country leading in particular kinds of innovation), but also state and local officials, as all states and many localities have their own economic development programs,” the report states.
For example, data based on congressional districts would help agencies understand regional economies better than data based on state boundaries. That’s important because economies aren’t always defined by state lines. For instance, economic factors in Washington, D.C., extend into neighboring Virginia and Maryland.
A second issue is international statistics -- specifically, the fact that the nation’s statistical system was designed around collecting stats on businesses in the United States. Now that the economy is increasingly global, more fine-grained international data is needed, the report states.
ITIF suggests several data improvements:
- A better price input index because it is currently hard to measure productivity in internationally traded sectors without the government distinguishing between price and quality. The lack of data distorts gross domestic product figures.
- “High-quality international comparisons of labor force, productivity, hourly compensation and prices for many industrialized countries,” which BLS’s International Labor Comparisons program calculated before budget cuts ended it.
- Industry data that is comparable to other nations’ by transitioning from the North American Industrial Classification System to the International Standard Classification System.
- National statistics, particularly data on a variety of technologies, including use of cloud, robotics, artificial intelligence and internet of things; how goods are produced and services performed; supply chains; and investments in research and development.
Through “The American Jobs Plan,” Congress has an opportunity to invest in modernizing and expanding the economic statistical system, the report states, and it should appropriate funding to that end.
“No companies make strategic or tactical decisions without thorough data on revenues, costs, and their competitive landscapes,” the report states. “Yet, we expect policymakers to build economic, technology and competitiveness policy on a shaky foundation of limited and often outdated data. Now is the time for Congress to make a major investment in upgrading, expanding, and modernizing our nation’s economic statistical system.”
Stephanie Kanowitz is a freelance writer based in northern Virginia.