Rarely have statistics been misused so much for political purposes as when recently the ECB published the results of a survey of household wealth in the Eurozone countries.
Thus begins a new column by Paul De Grauwe and Yuemei Ji, which points out, inter alia, that the median household wealth statistics currently being used by some German economists and commentators to justify future wealth grabs in the Eurozone periphery are in fact telling us something important about German inequality.
But it gets worse. Tim Worstall (H/T Eurointelligence) quotes the ECB report as follows:
2.2.3 VOLUNTARY PRIVATE PENSIONS/WHOLE LIFE INSURANCE
This section shows how households save for retirement using voluntary private pension
plans and/or whole life insurance contracts. Public pensions and occupational pension plans
are not considered in this report, as the value of some public pensions and occupational pension plans can be difficult for households to evaluate. Cross-country comparisons are challenging in the sense that institutional arrangements across countries with respect to the different modes of retirement savings, such as voluntary private versus public or occupational, can be quite substantial. A deeper analysis of these differences falls outside the scope of this report.
As Worstall says, this means that many households’ major asset is being excluded, essentially on the grounds that including them would be really rather difficult.
Time for the report to be consigned to the dustbin, surely, and for those people currently abusing it to spend even five minutes or so reflecting on what the likely political impact would be if their proposals were implemented.