In politics, data are used to market policy, not to make policy. That seems backwards to most of us: Shouldn’t information drive decisions, not the other way around? Not in the world of politics. And increasingly, not in the world of regulation by so-called expert agencies.
The current case in point is the proliferation of bad math and falsehoods masquerading as facts in the context of the possible regulation of set-top boxes. These make for powerful political marketing, but lead to bad policy when taken as truth.
Mr. Wheeler’s questionable data sources
In his January 27 op-ed in Recode (0), Federal Communications Commission (FCC) Chairman Tom Wheeler announced his intention to have the FCC begin regulating television set-top boxes — the devices that connect televisions to cable TV or satellite TV networks. Chairman Wheeler justified this initiative with information from Senator Ed Markey’s (D-MA) website (1) and commentary from two advocacy groups (2), apparently both of which Mr. Wheeler preferred to his agency’s own expert economists.
Senator Markey — along with Senators Sanders (I-VT), Warren (D-MA), Franken (D-MN), and Blumenthal (D-CT) — informed Mr. Wheeler in a letter that 99 percent of customers rent set-top boxes from their cable television providers, that the average customer spends $7.43 per month for each box rented, and that this is worth $19.5 billion per year. Mr. Wheeler faithfully repeated these numbers in his op-ed without attributing them to his Senate allies.
Do these numbers hold up to scrutiny? Not according to economist Hal Singer, who investigated the figures (3) to which Mr. Wheeler and his Senate allies gave so much life. Mr. Singer points out that, in reality, no one knows what customers pay on average for set-top boxes and explains that it is a complete mystery how anyone could arrive at the $7.43 number from the information Senator Markey says he gathered from the cable TV companies.
Mr. Wheeler’s use of politicians as his guide is so obvious that Senator Sanders’s campaign website (4) and The Huffington Post (5) both attribute the chairman’s actions to Senators Sanders and Warren. In their minds, Mr. Wheeler in this instance is simply a conduit for political marketing.
Fake data propagates through the DC echo chamber
Also in his op-ed, Mr. Wheeler cited an unnamed “recent analysis” that “over the past 20 years the cost of cable set-top boxes has risen 185 percent while the cost of computers, televisions and mobile phones has dropped by 90 percent.” This number was faithfully repeated by Cecilia Kang (6) and tech writer Jon Brodkin (7) without questioning how one should compare the prices of electronic devices that were built 20 years apart. More recently, lobbyists Trent Lott and John Breaux echoed these numbers in an op-ed in The Wall Street Journal (8), again without questioning whether they mean anything.
Fortunately for those who care about the meaning of numbers, Mr. Singer investigated these figures (9) as well. He points out that the “recent analysis” that Mr. Wheeler marketed was actually some simple arithmetic that would not receive a passing grade in elementary school: The advocacy groups that Mr. Wheeler mimes took Senator Markey’s $7.43 (which cannot be explained), divided it by the $2.60 average set-top box price in 1994, and derived a figure of 185 percent, which they called a change in price. This oversimplified calculation ignores inflation and glosses over the fact that a set-top box in 2015 is nothing like the ones cable companies used in 1994.
How politicians (mis)use data for policy marketing
Early in my career, I received an important lesson in political marketing. I was asked by a governor appointee to project the impact of proposed legislation on prices for telephone service. I carefully analyzed the question and submitted my answer. The person looked at my answer and said, “You have given me a carefully analyzed and defendable answer. But this is politics, not economics. Let’s assume you are half right.” He then doubled my estimate and forwarded it to the legislature.
This was a valuable lesson for a young economist: In politics, data are about marketing, not about analysis. They didn’t teach me that in graduate school. Nor do I teach this when I train utility regulators how to do their work. But apparently some regulators prefer decision-driven data to data-driven decisions.
- https://thekojonnamdishow.org/audio/#/shows/2016-02-02/debating-change-[email protected]:00