Statistics Tracks Economic Health

May 14, 2013

in A World Without Statistics

unemployment_cartoon RESIZED

Between 1880 and 1935, census takers in several countries began asking questions about employment and unemployment to help inform their nations’ economic planning. Census enumerators were told to define a person as unemployed if he or she had generally been gainfully employed previously, but were not currently working.

Unfortunately, this definition led to many difficulties, such as pinpointing whether an individual left the work force voluntarily for retirement or further training and underestimating the true unemployment rate, since those who had never held a job–but wanted one–were uncounted.

A group of U.S. statisticians working in the Division of Social Research of the Works Progress Administration (WPA), under the direction of John Nye Webb, had a better idea. They reasoned that a well-constructed survey would provide more accurate results and could be applied more often than a costly census.

They developed an operational definition of the unemployed as people who were not working during the previous week, but were searching for work. They tested their ideas in a pioneering random sample in 1937–the first scientifically constructed national sample conducted by the U.S. Census Bureau and the first to include confidence intervals in the reporting of results. The WPA “searching for work” definition of the unemployed performed well and ultimately became the international standard after its adoption by the United Nations’ International Labour Organization in 1954.

Without statistics governments wouldn’t understand key facts about their economies and people wouldn’t know when they are unemployed.