Better communication needed to tackle gaps in understanding of economic statistics

Economic measures affect our lives in many ways. They can impact how much tax you pay, how much it costs to take out a loan, and how much financial support job seekers receive—to name just a few.

But research published today—to which Full Fact contributed—shows gaps in the public’s understanding of economic statistics; a general disillusionment and apathy about the economy and people’s ability to influence economic outcomes; and, among some, a distrust in the measures and how they are collected or used.

The economic concepts the researchers looked at, such as inflation or interest rates, each have an impact on us. They should be communicated in a way that is understandable and meaningful to everyone—no matter how complicated they are; and as fact checkers, we can vouch for their complexity.

This research, carried out by the Economic Statistics Centre of Excellence (ESCoE), as part of the research programme of the Economic Statistics Centre of Excellence, can help Full Fact and others identify where to focus our efforts. It looked at a range of economic measures, including unemployment, trade and government deficit. It involved a nationally representative online YouGov survey of 1,665 people and 12 focus groups, who were shown fact checks and explainer articles written by Full Fact.

Abstract concepts harder to grasp

It found that people tended to be better informed on ideas that were more directly relevant to their lives, such as interest rates, as opposed to more abstract concepts about the “national economy” or measures seen as less important to day-to-day life. Less than half of respondents were able to identify the correct definition of GDP (or Gross Domestic Product, in full - it’s a main measure of the economy and you can read more about it here) from a list of options, while focus group participants saw it as economic jargon. 

Misperceptions about how measures are calculated affects whether they’re seen as accurate

In some cases, people had a good grasp of the concept, but didn’t know how the measure was calculated: almost two-thirds of survey respondents could define inflation, but there was limited knowledge of how it was calculated. A common belief was that it was based on either a very simple basket of everyday goods—such as bread, milk and alcohol—or one with a large range of items, some of which weren’t perceived as being relevant to everyone, or that luxury goods were given equal importance as day-to-day items.

Misperceptions about how measures were calculated could also have an impact on whether they were seen as accurate. For instance, 51% of survey respondents felt unemployment seemed higher than official figures (at the time 3.8%) suggested. It may be people assume that everyone who doesn’t have a job is unemployed—in fact, to be defined as unemployed you not only have to be out of a job but also looking for one. People who don’t have a job but aren’t looking—because they’re sick or disabled, or have caring responsibilities—are defined as “economically inactive”. Taken together, the unemployed and economically inactive make up closer to 24% of the working age population. (Full Fact has written more about employment statistics here.)

Distrust or cynicism about politicians could affect how people view these measures

Such misperceptions can have an impact on public trust, in both the measures themselves and in the organisations and people that use them. In some cases, the report found that distrust or cynicism about politicians affected the perceived reliability of the measures, even though the statistics are produced by an independent provider, the Office for National Statistics, which focus group participants generally weren’t aware of.

The research also found a general disillusionment and apathy about economic statistics, which was potentially linked to the view that economic issues were confusing and communicated in an inaccessible way using unnecessary jargon.

It was also clear that previous formative experiences was one of a number of factors - such as age or personal circumstances - that could affect people’s interest in, and understanding of, economics. The coronavirus pandemic and its effects are certain to remain etched in everyone’s minds for years to come - it is therefore essential that significant efforts are put into improving communication now. 

What’s next?

The researchers make a set of recommendations for further research, highlighting the need to consider more everyday economic concepts, such as minimum wage levels or pay days loans; to test different ways of presenting economics to the public; and explore whether improved understanding can change public perceptions. 

Importantly, the report also recognises that much research focuses on the public’s understanding, and suggests further work should look at economists’ understanding of public perceptions and how this impacts dissemination, to identify potential common ground.

Full Fact supports the researchers’ intention to follow up on this work with a range of people and organisations involved or interested in the communication of economics and economic statistics to the public, to establish recommendations for improvements.

Meanwhile, the use of our own fact checks and explainers in the focus groups gives us food for thought, and we will use this insight to consider how we can better communicate economic concepts to our readers. 

We know how complex these economic concepts are, but they are vitally important to us all, especially now. The coronavirus pandemic has had a huge impact on our economy, bringing with it an even greater need to make sure everyone understands these concepts and measures, and how they affect the world we live in.