News & Updates
Metrics Maketh Man: The Economic Indicators We Track Define Us
The challenge of summarizing the entire economy through individual indicators is akin to perfectly defining the word “economy” itself. There is an ongoing academic dispute over whether composite indicators or indices are inherently good or bad. Critics object to the arbitrary nature of the weighting process, or the extent to which the performance of individual indicators contributes to movement in a single “score” or composite indicator. Regardless, indices are powerful in their ability to showcase in one score what might not be apparent from examining multiple individual indicators in isolation.
In this post, we take one step back from the debate and instead draw attention to why indicators are selected, rather than whether they should have been selected or combined at all. Our values as a society are revealed in the curation of economic indicators (whether for the Brookings dashboard or UHERO’s Economic Pulse) – we implicitly prioritize certain metrics by elevating them to a position within a dashboard or index. Let’s take a deeper look at a few specific indicators that illustrate this point.
Checking Up on Hawaii’s Economic Health: Existing Metrics Tell Us Only Pieces of the Story
Although measures of GDP, unemployment, and retail and food sales all help assess the state of the local economy, there are a few caveats. One is data timeliness, or the schedule in which data is published and disseminated. GDP, reported quarterly, and retail and food sales, generally reported monthly, are often too slow to inform policy and planning decisions that need to be made and adjusted daily or weekly. However, Hawaii does do a good job in tracking unemployment claims weekly through the Hawaii Workforce Infonet, at least giving us a sense of the local job market. Another is data completeness, or how comprehensive a dataset is for answering the question at hand – in this case: how well is Hawaii’s economy recovering? Without one single identifiable metric for economic recovery, we need to look at other indicators beyond GDP, unemployment, and retail and food sales.