<b>T C A Srinivasa-Raghavan:</b> Garbage in, garbage out

Politicians are not the only ones who make unreasonable demands about proof. Social scientists, especially economists, also do the same thing. 

For example, some economists in the late 1960s had asked: “But where is demand curve?” During that extended debate that followed, dozens of economists made many seemingly valid points. 

In the end, though, the full argument was never made. That allowed the econometricians to sort of “solve” the “problem” and the matter was forgotten.

Which leads me to pose the central question of proof (or evidence) in social sciences, generally, and in economics, particularly: Does the sum of all valid points or data on a subject amount to a full argument on that subject, where a full argument is one which comprises both data and logic? 

 

Unfortunately, thanks to the glorification of data there is now a strong tendency to assume that by merely stating a number of facts, usually data, a complete argument has been made. Logic, completeness and consistency, which are also necessary, are almost never used.

Governments are most guilty of this malpractice, chief economic advisors, in particular. They are followed by economists and journalists, in that order. 

But while governments are often self-serving — for example, the claim about the subsidy reduction of LPG cylinders — the other two are just plain gullible or, even worse, stupid because of their blind faith in data.

At no point was this clearer than during 1988-90. The Economic Surveys of those years stated a whole lot of correct facts to suggest that the Rajiv Gandhi and V P Singh governments were economic geniuses. 

Most economists and journalists bought this line. But in 1991, the Indian economy crashed.

MGNREGA has been another case in point. It was touted by the Congress as a major success. But the Congress lost the 2014 election very badly, which it would not have, at least not so badly, if it had not allowed its data to obscure the truth that was based on the argument that it was a bad idea. 

Then there was the Sachar Committee Report on the condition of Muslim Indians. It did a stellar job in collecting all the facts/data about them and showing how badly off they were. 

But it failed to connect them with a valid argument, namely, that the Muslims were largely, or at least also, to blame for their terrible condition. Had it done so, the severe Hindu backlash in Uttar Pradesh that gave the Bharatiya Janata Party an absolute majority for the first time in 30 years would not have been there. 

There are several such examples. 

Mislead and pay

This general tendency can be found in all government data and reports. Sometimes it is deliberate, and at other times it is just plain incompetence. Mostly, however, it is self-serving.

Many professional economists and columnists who write on economic policy fail to notice this subterfuge by governments. This happens because very often all they want to do is to prove a debating point. 

They can’t see that the data is either incomplete or inaccurate or both because it fails to take into account the reasons that led to it being generated, or the process that generated it.

Economic and social science data do not occur in nature. That makes reasons and the process of data generation crucially important. Unless you take them into account, you can’t make a valid argument — logical, complete and consistent. 

In fact, much of what passes for data is the result of practices and politics having a great influence on the data being studied. For example, the bad debts of banks are directly a result of the way income was recognised by banks during 2010-12 even though everyone knew that it actually wasn’t there. Politics and practice were both responsible. (By the way, if anyone has analysed the effect of administrative practices or politics on our data, please let me know.)

Arguments 

As I said above, for an argument to be valid, it must have a beginning, middle, and end, which meet the requirements of logic, consistency and completeness, rather than just the requirements of data-based polemics, which few understand. 

A complete argument is not built from a lot of data or facts adduced to prove a conclusion already arrived at. Indeed, the beauty of a valid argument is that it holds even if the data and facts are wrong. 

The reverse is not true.