[Viewpoint] Spinning the stats

Not so long ago, I met Keio University Professor Takero Doi in Japan, and he was talking about statistics. Professor Doi is a prominent financial specialist in Japan. When asked what contributed to the public finance problem in Japan, he said, “It is more due to the mistake in population projection rather than the sluggish growth of the last decade. The most critical fault is the projection for the birth rate.”

Every five years, the Japanese government conducts a population survey. However, when the numbers are verified five years later, the actual birth rate has always been lower than the projection. The estimate was mechanically calculated to buffer social shock. After the error was repeated a few times, the population structure became completely distorted after 20 to 25 years. In the end, the pension revenue is always smaller than estimated while far more pension payments are issued.

“Although there weren’t intentional lies, manipulated statistics resulted in national catastrophe,” said Professor Doi.

Statistics may look like a series of cold numbers. However, depending on how you interpret these numbers, you could end up with completely different results. Recently, the Yomiuri Shimbun, a major Japanese daily newspaper, reported that there was a 70 percent chance that a great earthquake would hit Tokyo in the next four years. All of Japan was shocked and frightened.

However, the Earthquake Research Institute at the University of Tokyo has been warning for some time that there is a 98 percent possibility that an earthquake with a magnitude of seven or higher would happen in the next 30 years. The institute followed the classic method of calculating the possibility of experiencing the disaster in one generation. However, Yomiuri used the same reports and calculated the chance for the next four years. To the average citizen, the warning of an earthquake in the next 30 years is a distant possibility. However, an earthquake within the next four years sounds like a grim reality.

Nowadays, buildings in Tokyo are being reviewed for their ability to withstand earthquakes, especially the houses built during the rapid development period of the 1960s. Major builders are reluctant to knock down old structures that may contain asbestos, but Yakuza organizations are enjoying brisk business by hiring illegal immigrants to take over the jobs that may cause health problems.

Nevertheless, the Japanese government is complacent. At the time of the Hanshin earthquake, 80 percent of the total of 6,400 victims died from old structures collapsing on them. Earthquake-resistant design became a requirement in the 1980s, and 87 percent of the houses built after 1982 endured the earthquake that occurred directly under the city with a magnitude of 7.2. The Yomiuri Shimbun spun the statistics, and the homeowners who were not affected by the warning of the government are willing to fix their houses with their own money. If manipulated cleverly, statistics display great power.

What about statistics in Korea? Let’s look at the statistics of the North Korean economy. The Bank of Korea announced in November 2011 that North Korea marked a negative 0.5 percent growth. Pyongyang was irritated and suspected that Seoul had a certain intention to claim the North Korean economy was struggling. It is only natural that Pyongyang resists the claim as it advocates itself as a “strong and prosperous nation.” But even the civilian experts in the South say that the Lee Myung-bak administration has manipulated the statistics to emphasize the economic sanctions against the North since the sinking of the Cheonan warship.

The confusion existed during the Roh Moo-hyun administration as well. The estimated per capita national income of North Korea was about $1,000. A civilian expert said that the government was concerned about the domestic skepticism over North Korean assistance if the per capita national income was over $1,000. Statistics can be manipulated to suit the purpose and therefore cannot be entirely trusted.

Professor Doi said that it was always possible to make a subjective prediction on important statistical data. Most of all, politicians and bureaucrats should not get involved. “Only when a neutral group is given the final decision, the speed and direction can be precisely estimated.”

However, Professor Doi’s advice is far from reality. In Korea, the total household debt is over 912 trillion won ($810 billion), and the welfare policy promises would cost 300 trillion won in five years, but Koreans act as if these numbers won’t affect their lives.

The Saenuri Party says that the government interferes with the campaign promises of the party and that Democratic Unity Party attacks are extremely shameless. At this rate, can we avoid disaster? People in Tokyo had impressive insight in fixing and reinforcing their houses before earthquakes, but the politicians in Seoul want to spend taxpayers’ money to win favors.

by Lee Chul-ho

* The author is an editorial writer of the JoongAng Ilbo.