LIGHTS DON’T LIE – Lies, damned lies, statistics, and authoritarian statistics:
China, Russia and other authoritarian countries inflate their official GDP figures by anywhere from 15 to 30 percent in a given year, according to a new analysis of a quarter-century of satellite data.
The working paper, by Luis R. Martinez of the University of Chicago, also found that authoritarian regimes are especially likely to artificially boost their gross domestic product numbers in the years before elections, and that the differences in GDP reporting between authoritarian and non-authoritarian countries can’t be explained by structural factors, such as urbanization, composition of the economy or access to electricity.
Martinez’s findings are derived from a novel data source: satellite imagery that tracks changes in the level of nighttime lighting within and between countries over time.
“The key question that the paper tries to tackle is whether the checks and balances provided by democracy are able to constrain governments’ desire to manipulate information or, more specifically, their desire to exaggerate how well the economy is doing,” Martinez said via email. “The way I try to answer the question above is by comparing GDP (a self-reported indicator, prone to manipulation) and nighttime lights (recorded by satellites from outer space and much harder to manipulate) as measures of economic activity.”
Martinez is right – government statistics lie, but the electricity usage cannot. However you are able to measure it, and nighttime luminescence might be as close as you can get to the information for closed societies, it can be used to reasonably accurately assess the true levels of economic activity. It’s through looking at the power consumption that we are able to say that most countries, particularly in the developing world, are in fact much more prosperous than the official numbers suggest, not necessarily because the governments want to deceive their people and the rest of world but because they can’t measure the full extent of the black and grey economy. Thus countries like Egypt probably have their real GDP up to 75 per cent higher than their official calculations show. While this is an extreme case, others like Nigeria or Thailand still under-count by 30 to 50 per cent. It’s interesting then that while for most countries electricity use tells a good story (people are actually better off than we think), for the authoritarian giants they reveal yet another self-serving lie.
Lenin had once famously said that communism is the Soviet power plus electrification. But the more light you shine on it the more you reveal it for the sham it is.