Data Types Economist Use to Measure the Economy

Data types Economist use to measure the economy.

By Rafael A. Lopez

Brainstorm two or three types of data economist use to measure the economy.

Economists like Business managers use many forms of performance metrics to measure the economy or their business. In many instances these two professions can go hand in hand, they involve heavy data analysis and data conversion. The following metrics are listed in no type of order, economic growth, unemployment, investment levels, inflation, real disposable income, exchange rate, and when measuring a country economic growth, you can also use government borrowing / national debt (Ross). Financial professionals, business managers, economist have to have a deep understanding of how these metrics work, and why they work.

1: How do they turn the data into information?

Let us take economic growth; economist use a method called gross domestic product or GDP for short to measure this metric. Gross domestic product is the total market value of all goods and services produced by a country for a year or any given time period (Ashanti). When collecting this data, you would generally use a graph showing percentages, numbers and different calculations. The data collected for example would be around wages, productivity, investments, just like in business when reading a profit and loss statement, you would have similar data showing where opportunities are available. If you take the wages and productivity data and it shows a company using too much overtime when we are least productive, then we have an opportunity to lower the number of employee hours needed at certain times during our less foot traffic business hours. Collecting, and Analyzing the data, then creating a process to produce results or improvements and resolving problems or opportunities is a vital tool for any economist or business manager. Doing a proper deep dive into any business report will give you a better understanding of how your business or economy is trending; you can even better prepare for upcoming events that may transpire.

2: What issues do they encounter when attempting to measure the economy?

The amount of data is one issue with measuring the economy; having too much data to analyze or having too little can become a complicated process to assess economic development accurately. The one example I gave earlier was the use of the gross domestic product in measuring the economic state of a country’s. In an article, I read from Mark Thoma suggest that some experts like Joseph Stiglitz and Professor Erik Brynjolfsson state that GDP is not the best way to assess the health of their economies, they are determined to find a better process (Thoma). These same experts state that we must use life expectancy, happiness in our standard of living, and environmental factors when measuring our well-being. The problem with this metric is being able to determine the difference between high and low standards, everybody is different, and no situation is identical. Another issue economist can run into is not considering non-economic factors like a county’s political or social state, cultural differences and religion can also play a part, look at the situation in Venezuela and how their economy is being affected today.