EYE ON THE PIE: We need better number-crunchers

September 5, 2005

Quietly, the Daniels administration is doing something that may be a historic first: It is trying to improve the information available for administrators, legislators, analysts, scholars and ordinary citizens. It's a big task, with many barriers to success. Typically, units of state and local governments don't share data with one another. They think narrowly about what they have to do today and don't consider the needs of anyone else.

The Indiana Data Initiative-which involves Indiana University, other state universities and state government, financed in part by Lilly Endowment Inc.-probably promises more hope for better information than any effort ever attempted in Indiana.

What needs to be done? First and foremost, stupidity needs to be attacked. Let's take one of the best agencies that generates data, the Department of Workforce Development. DWD will tell you it is guided, even controlled, by the standards of the U.S. Bureau of Labor Statistics. So what? If absurdity is rampant in Washington, is it not our responsibility to challenge it?

For example, employment statistics are divided into two major sectors: the private sector and government. There are three major types of governments: federal, state and local. But not in Kokomo. There are no data for July of this year or last year for federal or state employees in Kokomo.

Why not? Is it a secret? Is there some danger to national security if we know how many postal workers and university employees are in Kokomo? This is not the private sector, where we want to protect privacy.

Then there is Muncie, where we can find out the number of all government workers, the numbers working for state and local governments, but not the number of federal workers. Hey, any kid with a fifth-grade education should be able to figure out the number of federal workers, given the data already available. How stupid are we supposed to be?

That's one side of the picture. We need to get appropriate data released from the bondage of bureaucracy. Then there is another side to the picture: analysis.

Good data are like a symphony, with major themes and exciting variations. Currently, we get the number of persons employed in each metropolitan area each month. Hence, we learn that the Fort Wayne metro area had a growth rate of 1.2 percent between July 2004 and the same month this year. That's only the seventh-best rate among the 15 metro areas in Indiana. What we do not learn is that Fort Wayne ranked first in the state over the same period in the breadth of its growth.

How do we know that? It's the result of using a diffusion index, a simple measure that is well-documented and used by the Bureau of Labor Statistics. A community could lose many jobs, yet that change might be in only one sector, while the rest of the economy performs well. Shouldn't we know that? A diffusion index tells us how widespread the change is. But someone has to calculate it and few of our state employees are familiar with the statistical techniques we need to understand what's going on in our economy.

The Indiana Data Initiative must be more than getting better access to better data. That is essential. However, beyond that, we need better-educated state workers, newspaper people and legislators if we are going to make good decisions based on good data.

Marcus taught economics more than 30 years at Indiana University and is the former director of IU's Business Research Center. His column appears weekly. To comment on this column, go to IBJ Forum at www.ibj.comor send e-mail to mortonjmarcus@yahoo.com.
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